(Bloomberg) — China's housing sales slump dragged on into March, showing that the sector's hoped-for turnaround is still far from in sight.
Most Read Articles on Bloomberg
New home sales at 100 major real estate companies fell about 46% year-on-year to 358 billion yuan ($49.6 billion) from the same month last year, following a 60% drop in February, according to preliminary data from the China Real Estate Information Corporation. .
China's prolonged drought in real estate sales is weighing on many of the country's biggest construction companies, and mounting bad loans are eating away at the balance sheets of its biggest state-owned banks. The Chinese government has tasked banks with not only supporting debt-laden developers but also helping to revitalize the country's economy.
Country Garden Holdings, once a powerhouse in the housing sector, made a surprise announcement late Thursday that it would miss a deadline to report its annual financial results. China Vanke, once the largest listed developer, said its net profit fell 46% last year, a sharper decline than analysts expected.
March traditionally sees a surge in home sales, up 93% from February, but sales in the third and fourth quarters of last year were still below the monthly average, according to CRIC.
The agency warned that the housing market was unlikely to pick up anytime soon and pressure on developers to sell contracts would continue. CRIC expects April sales to be flat or slightly up from March.
The index tracking major mainland-listed development stocks rose as much as 1.6% on Monday morning. The Hong Kong Stock Exchange is closed for public holidays.
Due to the downturn in the real estate market, Fitch Ratings has downgraded the credit ratings of some construction companies, including Vanke and Longfor Group Holdings, to junk territory.
Fitch Ratings also cut its outlook for the housing market on Thursday, predicting a 5-10% decline in new home sales this year due to weak demand for home purchases. Ratings agencies had previously predicted a decline of 0-5%.
(Updates with market reaction in 7th paragraph.)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
