China Property:Weekly Tracker,Sales Moderate Amid Rising Mortgage Rate

New home sales dropped 25% WoW in 26 major cities for the week endedAugust 13, per Soufun data. In terms of breakdown, sales in tier 1, 2 and lowertier cities were down -2%, -28% and -13% WoW, vs -36%, +28% and -2% WoW lastweek. Weekly sell through rate declined for a second week, from 76% to 66%,with 18ppt fall (from 68% to 50%) in tier 1 cities and 10ppt decrease (from 78%to 68%) in tier 2 cities. In our view, the sales slowdown last week was mainly dueto: 1) traditionally slow season effect in July and August; 2) increasing 1st homemortgage rate in some major cities which is likely to hurt demand. According todata from Rong360, July's national average 1st home mortgage rate (35 cities) hassurpassed the PBOC benchmark rate (4.90%) to 4.99%. However, sales volume inBeijing rebounded 55% WoW this week, while transacted ASP dipped slightly. Weattribute this to 1) stabilized policy stance, as last week, 3 high-end projects (fromCR Land, Jinmao and China Merchants Shekou) got presales permits with ASP ofRmb95,000/sqm, higher than the government’s price cap of Rmb80,000/sqm;and 2) majority of new launches are located in outskirt areas, which ultimatelybrought down the blended ASP. August MTD sales fell another 12% YoY from -10% YoY in July, with tier 1, 2 and lower tier cities -61%, 3% and -32% YoY, vs -46%, 3% and -34% YoY, respectively, in July MTD.

    Secondary sales were down 6% WoW in 11 major cities for the week endedAugust 13, per Wind data, dragged mainly by -50% WoW in Shenzhen, partly dueto high base. Weekly transaction volume in YRD region remained resilient at+40% and +10% WoW in Suzhou and Wuxi, respectively. August MTD salesdeclined 31% YoY, vs -28% YoY in July. In terms of breakdown, tier 1, 2 and lowertier cities recorded -47%, -26% and 8% YoY, vs -41%, -32% and 39% YoY,respectively, in July MTD.

    July NBS data softened down: NBS reported July property sales decelerated at0% and 4% in volume and value terms, vs 18% and 26% in June, mainly due tofront-loaded sales in June. Meanwhile, floor space new starts declined sharply by17ppt to -3% YoY in July amid hotter-than- usual weather, which supports ourview of slower growth in new starts in 2H17 compared to 1H17 (see more fromour report: NBS July 2017 Data: Slower July Data)