CHINA’S home sales slump dragged on in March, signalling that a much-hoped turnaround for the sector is not yet in sight. 

The value of new home sales from the 100 biggest real estate companies slid about 46 per cent from a year earlier to 358 billion yuan (S$68 billion), following a 60 per cent decline in February, according to preliminary data from China Real Estate Information Corporation (CRIC).

China’s protracted property sales drought has weighed on many of the nation’s biggest builders and eroded the balance sheets of the largest state-owned banks as their bad loans swell. Beijing has tasked banks with helping pump up the domestic economy as well as supporting debt-laden developers.

Country Garden Holdings, once a powerhouse in the residential space, made a surprise announcement late on Thursday (Mar 28) that it will miss a deadline for reporting annual results. China Vanke, at one time the largest listed developer, said net income tumbled 46 per cent last year, sliding more than analysts expected. 

March is traditionally a quick period for home sales, surging 93 per cent from February, but sales were still weaker than the monthly average in the third and fourth quarters of last year, according to CRIC.

The agency cautioned that the housing market is not likely to warm up soon, which will maintain pressure on developers’ contract sales. It forecast April’s sales to stay unchanged or increase slightly from March. 

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Property market weakness has prompted Fitch Ratings to downgrade the credit rating of some builders into junk territory, including Vanke and Longfor Group Holdings. 

Fitch Ratings on Thursday also cut forecasts for the housing market, and now expects a 5 to 10 per cent fall in new home sales this year amid weaker home-buying demand. The ratings firm previously estimated a 0 to 5 per cent decline. BLOOMBERG