China Property Sales Drop for 10th Straight Month in February

Property sales on mainland China fell for the tenth straight month in February, amid low demand during the Spring Festival break and fears the embattled sector will continue to decline.

China’s top 100 developers saw contracted sales of 185.7 billion yuan ($25.8 billion) during the month – a year-on-year decline of more than 60% and a 21% drop on sales in January, according to a report by the South China Morning Post in Hong Kong, which cited research from China Real Estate Information Corp (CRIC).

State-backed developers such as Poly Developments and China Vanke both suffered a sales plunge by over 50% year-on-year during the month, while Country Garden, one of the top private developers, saw a 78% plunge over sales in February 2023 and Longfor Group suffered a 55% sales fall.

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Weak growth momentum seen extending into March

Nomura said a turnaround in the property sector depends on when home sales stabilize. Other analysts said consumers are exercising caution as sentiment among homebuyers remains uncertain.

In a note on Thursday, Nomura said major growth indicators are likely to show a broad-based slowdown in their year-on-year growth rates in January-February from December last year, as the base effect due to China’s exit from Covid-19 curbs in late 2022 subsided.

“The official manufacturing PMI may continue to point to a contraction, while the non-official manufacturing PMI could moderate on fading pent-up demand after the Lunar New Year holiday, a worsening property contraction and a weak start for construction activity,” Jing Wang and colleagues said.

“We expect the weak growth momentum to extend into March and maintain our view that the current economic dip is likely to worsen into the spring. We maintain our below-consensus GDP growth forecast of 4.0% y-o-y in Q1 (down from the actual 5.2% in Q4).”

Analysts at CRIC said that while local governments were easing restrictions for homebuyers, there was still an imbalance between supply and demand, “and it takes time for the market to regain confidence.”