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New home sales retreat on festive break
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NEW home sales in Shanghai fell for the second month in February due to the traditionally slack momentum during the festive season, according to latest market data.
The purchases of new homes, excluding government-subsidized affordable housing, dropped 44.1 percent from a month earlier to 422,800 square meters, Shanghai Uwin Real Estate Information Services Co said in a report yesterday. The figure was almost flat year on year.
“The plunge was no surprise because of the Spring Festival factor, during which monthly home sales usually hit the bottom,” said Huang Zhijian, chief analyst at Uwin.
“Hopefully transactions will get a major rebound this month which is critical for the real estate market as the March performance will likely set the tone for the rest of the year.”
The average cost of new houses climbed 2.1 percent from January to 29,267 yuan (US$4,666) per square meter, Uwin data showed. That, however, marked a year-on-year rise of 14.5 percent.
The People’s Bank of China on Saturday cut the interest rates for the second time in three months in its latest move to boost the country’s economy. The one-year lending rate fell 0.25 percentage points to 5.35 percent, which allows mortgagors to pay 322 yuan less monthly in their repayments for a 30-year, 2 million yuan loan.
Earlier last month before the Chinese New Year holiday, the PBOC had already cut the reserve requirement ratio for banks by 0.5 percentage points, which was expected to free up nearly 1 trillion yuan in liquidity, according to analysts.
“All these measures should have a positive impact on the real estate market but developers should be cautious in their pricing strategies as inventories of new houses still stand at a high of more than 12.8 million square meters in Shanghai,” Uwin’s Huang added.
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