China: Developers' contract sales growth fell in September

This Nomura Asia Chart Alert examines China's property developer contract sales. Growth in contract sales value for the top 100 developers turned negative in September after August's rise, with Q3 and year-to-date growth also negative amid highly volatile monthly data. On city-level data, new home sales by floor space in 20 major cities improved from August, as did existing home sales volumes in a sample of 18 cities, with tier-1 cities outperforming lower-tier cities. The long-awaited targeted mortgage subsidy program was finally unveiled, but we see limited impact as it mainly targets purchases of low-priced homes, especially in small cities where most people still expect home prices to decline further due to sustained population outflows and the K-shaped economy. To end the ongoing property bust, Beijing might need to address the colossal inter-firm arrears related to the property sector.