China Aug Property Sales See Big Drops, But Land Reserves Up

     BEIJING (MNI) - Most major property developers experienced double-digit

drops in property sales as measured by floor space in August, as the Chinese

government's controls on the property market continued to bite, according to a

report published Tuesday by E-House, a Shanghai-based property information and

services provider. 

     Data from 50 major hotspot cities where prices have risen rapidly showed

drops in property sales by area on both a year-on-year and a month-on-month

basis. In aggregate, sales dropped to 5.16 million square meters, down 25% on

the month and 33% on the year. 

     "Housing policies in such cities continued a tightening trend in the second

quarter, which had a relatively big impact on sales of commodity housing units,"

said Yan Yuejin, director of the research department at E-House.

     On the other hand, land reserves held by property developers continued to

edge up in August. 

     The 30 A-share property companies E-house regularly monitors held 64.1

million square meters of land at the end of August, up 5% m/m and 29% y/y. The

data exclude the amount of land the companies obtained through mergers and

acquisitions of other property companies. 

     Property developers' land reserves have been growing strongly since

September last year, E-House noted. 

     "Starting from the second half of 2015, the property market in China has

heated up steadily, property developers have sped up the pace at which they cut

excess inventory, and money supply has improved steadily," Yan said. M2 money

supply growth accelerated from 10.8% in May 2015 to 11.1% in February this year

before dipping below 10% in May, June and July. 

     "Additionally, land supplies in cities have started to speed up, naturally

pushing up the size of the companies' land reserves." 

     E-House noted that property developers are still enthusiastic about

acquiring more land, helped by more land for development being made available by

various cities in an effort to curb housing price growth.

     "Some property companies are likely to increase their land acquisitions in

[smaller] Tier-3 and Tier-4 cities close to major metropolitan areas to better

improve their land reserve structures" for future development, the report said.

     Yan told MNI he expects that developers' land reserves could peak in the

second half of 2018.  

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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