Given a traditionally low season for property sales in July, buying sentiment was further damped by rising home prices, falling supply of new homes and liquidity crunch in June, resulting in an over 20% m-o-m plunge in total home sales. 86 million square meters of residential floor area were sold in China in July, down 20.4% m-o-m, while the total sales value dropped 17% m-o-m to RMB 516.5 billion.
In first-tier cities, total home sales dropped 15% m-o-m to 4.3 million square meters, with the loss mainly stemming from Shanghai, where the home sales plunged over 40% in July to 1.3 million square meters. Other first-tier cities, on the contrary, reported varying degrees of increases in July: Beijing’s home sales rose 34.7% m-o-m to 1.2 million square meters; Shenzhen up 7.8% and Guangzhou up 4%.
Despite the falling sales amid traditional low season and credit squeeze, China home prices continued to climb further on the back of strong end-user demand. New home prices in 70 major cities continued to rise for the seventh consecutive month in July by an average of 7.5% increase compared with a year ago – the biggest jump since January 2011, according to data released by the National Bureau of Statistics. 62 cities saw their new home prices rose on a monthly basis in July, compared with 63 in June. 4 cities saw new home prices remained unchanged.
Price gains in first-tier cities this year became more solid in July. In Guangzhou, new home prices were 17% higher than they were a year ago, compared to 16.5% in June and 15.5% in May. The y-o-y growth rates of new home prices in Beijing and Shanghai also rose to 14% in July, while that in Shenzhen declined to 11.9% after a sharp upsurge in the past two months.
The outlook for the housing market remains positive on the back of the strong underlying housing demand and the pickup of real estate investment. Due to the strong home sales this year, developers are quickening their construction pace. New construction in the first seven months rose to 8.4% y-o-y, improving from 3.8% y-o-y in January-June. Real estate investment also picked up in July with the y-o-y growth rate accelerating from 20.3% in the first six months to 20.5% in January-July period.