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China real estate sales pick up as developers push projects to market
CHINA'S real estate investment growth slowed in May but remained firm, with sales growth hitting a near one-year high, defying fresh purchase curbs and higher financing costs and indicating resilience in one of the country's main economic drivers.
Property investment rose 9.8 per cent in May from the same period a year earlier, compared with a 10.2 per cent rise in April, according to Reuters calculations based on National Bureau of Statistics (NBS) data. It grew 10.2 per cent in the first five months of the year.
The figure mainly focuses on residential real estate but also includes commercial and office space.
Real estate directly affects about 40 business sectors in China and is a major driver for the economy.
But a market boom has raised bubble concerns and prompted more than 100 cities to take measures to tame soaring home prices.
In a sign of growing confidence among property developers, new construction starts measured by floor area rose 20.5 per cent in May from a year earlier, picking up from 2.9 per cent in April, Reuters calculations showed.
Property sales by floor area rose 8 per cent in May on-year, the fastest pace since June 2017 and turning around from a 4.1 per cent drop in April, as transaction volume in smaller cities climbed.
"The jump in sales may largely be due to more financing pressure faced by property developers, so they are looking to push more projects into the market for funds despite price caps on new launches," said Joe Zhou, head of research for commercial property agency JLL China.
The mild slowdown in investment reflected slower construction, but developers' appetite for land and transactions remained high, with buyer demand picking up in smaller cities.
Major Chinese property developers such as Country Garden and Evergrande Group have reported solid sales growth for the first five months of this year.
The data comes even as a slew of smaller cities in China rolled out fresh tightening measures in May aimed at containing fast-rising property prices.
At the same time, more provincial capitals are allowing out-of-towners to qualify as local property buyers, bypassing local buying restrictions, through a new campaign that seeks to attract skilled labour.
In year-to-date terms, property sales rose 2.9 per cent in the first five months.
In May, China's housing ministry issued two express warnings about the current market rebound and vowed to step up checks on local government efforts to rein in home prices and hold accountable those cities that failed to do so.
New household loans, mostly mortgages, rose 16 per cent in May from April, accounting for 53.4 per cent of total new loans from 44.8 per cent.
But analysts noted other developers have struggled to refinance debt as official efforts to tighten domestic credit in the housing market hampered access to funds.
"In the longer term, I think developers are not that optimistic and investment and sales will slow on tighter financing," said JLL's Mr Zhou. REUTERS