China Vanke's Property Sales Slip
March 08, 2010 - China
By Esther Fung from The Wall Street Journal Asia
China Vanke Co.'s property sales fell in February for the first time in 11 months, after the government introduced measures aimed at cooling the real-estate market.
A slowdown in property sales was anticipated, as Beijing's measure to rein in speculative home purchases created uncertainty among home buyers. The measures followed government data showing property prices rose as much as 9.5% in January.
Seasonal factors likely also hurt February sales; the week-long Lunar New Year holiday was in February this year but fell in January last year.
China's largest property developer by market share said its February property sales totaled 2.51 billion yuan ($367.6 million), down 35% from a year ago, after sales nearly tripled to 6.26 billion yuan in January.
"The seasonal factors could have had a bigger impact on the transaction volume this time, and while there could be a temporary rebound in March sales, we expect the credit-tightening measures to play a major role to temper the market in the coming months," said Johnson Hu, an analyst at UOB Kayhian.
In terms of floor space, Vanke's property sales totaled 211,000 square meters in February, down 59% from a year earlier, the company said.
Property prices in China, especially in the country's more affluent coastal areas, boomed last year after Beijing took measures to support the real-estate market as part of its economic-stimulus package unveiled in November 2008.
Late last year, however, Beijing started to implement credit-tightening moves after record-high property prices raised concerns of an asset bubble and prompted policy makers to shift their priority to managing inflation risks.
The tightening moves included the introduction of a nationwide minimum down payment on land, and the withdrawal of a favorable business-tax policy on the purchase of second homes.
China Vanke said its January-February 2010 property-sales revenue rose 44% to 8.78 billion yuan from the same period last year.
In terms of floor space, China Vanke's property sales fell 8.4% to 735,000 square meters in the first two months of this year. The combined figures for January and February remove distortions caused by the Lunar New Year holiday.
Transaction volumes will likely fall 10% in 2010, said Frank Chen, a BNP Paribas analyst. He said property prices are also likely to decline by 10% as tighter credit will weigh on purchases.
China's government on Friday pledged to rein in soaring real-estate prices, curb speculative investment and expand low-cost housing amid concerns about the formation of an asset bubble in the property sector.
In an address to the annual session of parliament, Premier Wen Jiabao said Beijing would crack down on illegal practices aimed at driving up prices to ensure the "steady and sound development of the real-estate market."
This article has been republished from Wall Street Journal
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