(Bloomberg) — Home sales in China continued to decline in March, suggesting that a hoped-for turnaround in the sector is not yet on the horizon.
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The value of new home sales from the top 100 real estate companies fell about 46% from a year earlier to 358 billion yuan ($49.6 billion), after a 60% decline in February, according to preliminary data from China Real Estate Information Corp.
A prolonged drought in property sales in China has affected many of the country's largest construction companies and eroded the balance sheets of the largest state-owned banks as their bad loans ballooned. Beijing has tasked banks with helping to stimulate the local economy as well as supporting debt-laden developers.
Country Garden Holdings, once a powerhouse in the residential space, made a surprise announcement late Thursday that it would miss a deadline to report annual results. China Vanke, once the largest listed company, said net income fell 46% last year, more than analysts expected.
March is typically a fast period for home sales, up 93% from February, but sales were still weaker than the monthly average in the third and fourth quarters of last year, according to CRIC.
The agency warned that the housing market is unlikely to recover soon, which will continue to pressure developer contract sales. CRIC expects April sales to remain unchanged or slightly above March.
An index tracking shares of major developers listed on the mainland rose as much as 1.6% on Monday morning. The Hong Kong Stock Exchange is closed for holiday.
The weakness in the real estate market has prompted Fitch Ratings to downgrade the credit ratings of some builders to junk territory, including Vanke and Longfor Group Holdings Ltd.
Fitch Ratings on Thursday also lowered its outlook for the housing market, now forecasting a 5% to 10% decline in new home sales this year amid weak homebuying demand. The rating company previously estimated a decline of between 0% and 5%.
(Updates with market reaction in seventh paragraph.)
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