Of the thirty-two key developers that reported July sales, thirty showed a MoM decline. However, July has historically been a slow month, and in the past three years, the sector has always posted a sales decline (Fig 1). With reference to the historical pattern, we believe the sales of major developers will improve in September, and grow further in October. So far, 37 cities have announced property policy relaxations, with Foshan joining the camp last Thursday. We just spent two days in Foshan and found that buyers’ sentiment has improved with more visitor traffic and fewer discounts. Developers plan to speed up launches to clear inventory, and 2H sales will likely be better than 1H. We reiterate our forecast that physical new residential prices will bottom around the end of September.
FYI, Mac has been calling this bottom and a Chinese developer long for a year at least…my view remains they are far to early.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
