Credit Suisse said it maintained its ‘overweight’ rating on China’s property sector despite June new home sales showing weakness in several key provincial cities. It believes a recovery is possible by the fourth quarter.
Credit Suisse analyst Ronney Cheung said low sales figures do not bode well for China’s listed developers who are now struggling to meet their year-end goals.
Transaction volumes from all cities were down 23-56% month-on-month with the exception of Beijing and Tianjin, up 15% and 13% respectively. Shenzhen was the hardest hit, with transactions tumbling 38% month-on-month.
Sales are expected to remain stagnant up to September on fears of potential rate hikes by the central bank in a bid to fend off growing inflation and still-lower transaction volumes during the Olympic Games.
However, there should be a turnaround.
Ronney Cheung said, ‘A recovery in transaction volumes should be expected from September onwards, due to the removal of several concerns and pent-up demand. We estimate developers may further cut prices in order to meet their funding needs and to achieve their sales targets.’
Source: Quamnet