(Yicai Global) April 18 -- Analysts remain cautious about the recovery in China’s property market after home sales rebounded further last month and the number of cities where house prices rose hit the same level as in the first half of 2019.

Commercial house sales rose 4.1 percent to CNY3 trillion (USD436.4 billion) in the three months ended march 31, figures from the National Bureau of Statistics showed today, while residential house sales jumped 7.1 percent. The sales area of commercial housing fell 1.8 percent to 299.5 million square meters in the quarter, but the sales area of residential housing rose 1.4 percent.

The recovery picked up pace in March. The sales area of commercial housing was 148.1 million sqm, with total sales of CNY1.5 trillion, which was higher than a year earlier and more than the CNY1.4 trillion recorded in March 2019 before the Covid-19 pandemic broke out.

NBS data also showed that the area of housing completed in the first quarter climbed 14.7 percent from a year ago, while that of residential houses surged 16.8 percent.

The recovery in sales last month was down to seasonal factors and improved expectations among homebuyers in many cities after favorable policies were introduced, industry insiders told Yicai Global.

March is a traditional peak season for home sales that started in early February this year because the supply in key cities surged as real estate developers made greater efforts to put more properties on sale to compete for buyers, said Jin Jing, an analyst at Guosheng Securities.

Data collected by independent market institutes also showed recovery signs. The supply of new homes in 30 key cities soared 164 percent last month from February, and transactions jumped 21 percent in the first quarter from a year ago, per figures from the CRIC Research Center.

Uncertain Second Quarter

But the sustainability of the recovery still face challenges. “This round of housing market recovery may not last for long,” Li Yujia, chief researcher at Guangdong Housing Policy Research Center, told Yicai Global. Guosheng Securities’ Jin agreed.

The early peak season for housing sales in previous years lasted until April, and the market was usually kept hot with special promotions such as the May 1 Labor Day holiday sales and the end of first half sales, Li noted.

But since some developers hit 40 percent to 50 percent of their annual sales targets for this year in February, plus the fact that pandemic-suppressed demand from people planning to marry or move up the property ladder was mostly met in the first quarter, it is doubtful whether the recovery can continue this quarter, Li explained.

In fact, house viewings and transactions had already started to wane at the end of last month, he added.There is basically no demand for real estate investment now, so the housing sales area and revenues will grow more slowly, making it harder for the recovery to continue, said Yu Xiaoyu, director of real estate research at Yihan Consulting.

Property investment dropped 5.8 percent in the first quarter from a year earlier, today’s NBS data also showed. In the months of January and February, investment fell 5.7 percent.

The current recovery wave is mainly reflected in sales volume, while the pick-up in housing prices is slower than expected, Yu noted, adding that the sales volume will impact sales prices only a little if market demand is not resilient enough.

Editors: Tang Shihua, Futura Costaglione