(Yicai) April 2 -- The sales area of new homes in key Chinese cities declined last quarter, with the overall real estate market remaining sluggish. By comparison, second-hand home sales in first-tier cities rebounded in March.

Around 26.39 million square meters of new homes were sold in 50 key cities in China in the three months ended March 31, down 30 percent from both the prior quarter and a year earlier, according to statistics from research institute China Residence Information Circle. The figure topped about 11 million sqm last month, up 89 percent from February, but still down 32 percent from a year ago.

The supply area on newly built homes of the 50 cities reached 14.87 million sqm during the first quarter, plunging 48 percent from the fourth quarter of last year and 42 percent from a year earlier.

The national new housing market is still in the "de-stocking" phase, with the total area of homes for sale on the market in the key cities remaining about the same at 305 million sqm as of the end of February from Dec. 31, but falling 3.7 percent from a year ago, according to data from the China Index Academy.

Based on the average monthly sales area over the past 12 months, the clearance period for the inventory on the market at the end of February was 24 months, compared with 23.2 months at the end of last year and 19.8 months a year earlier.

Sales at China's Top 100 Builders

China's top 100 property developers saw their sales shrink 23.4 percent to CNY620.9 billion (USD90.1 billion) in the first quarter from a year earlier, according to data released by the China Index Academy. However, the decline narrowed from 27.1 percent in the first two months of the year.

Only 16 of the 100 builders have achieved sales of over CNY10 billion (USD1.5 billion) so far this year as of March 31, down from 17 a year earlier, while the number of those that reached between CNY5 billion and CNY10 billion fell to 28 from 38.

The poor first-quarter sales performance of the top 100 developers was partly due to promotional activities at the end of last year aimed at meeting annual sales targets, absorbing a significant portion of market demand, said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. Builders were less inclined to launch new projects or initiate promotional campaigns at the start of the new year, Li added.

Second-Hand Home Sales by Area Rebound

Sales of pre-owned homes in key cities recovered last month, particularly in first-tier cities Beijing and Shanghai, where first-time buyers with moderate economic conditions are beginning to enter the market.

About 18 million sqm of second-hand houses were sold in 20 key cities in March, a 117 percent surge from February and 6 percent year-on-year, according to data from CRIC. The figure rose 4 percent to 41.08 sqm last quarter from a year ago.

Beijing saw 19,866 pre-owned homes change hands last month, up 3.4 percent from a year earlier and setting a new record for the past 15 months. Some 1,422 sales were made on March 31, the highest single-day volume since April 2023.

The monthly second-hand home sales of between 12,000 and 17,000 units in Beijing can be considered a normal market condition based on historic data. The figure exceeding 20,000 units signals that the market is entering a relatively heated state.

Cheaper properties were the main drivers of the second-hand home market in Beijing, with sales of those priced below CNY3 million (USD435,865) accounting for 66 percent of the total, up from 47 percent a year earlier, according to data from the 5I5J Research Institute.

"A significant number of homes on the market have entered the price range that is affordable for first-time buyers after continuous adjustments in housing prices," 5I5J Research Institute said. "Coupled with the improvement in market expectations, the pent-up demand from potential homebuyers was released in a concentrated manner last month."

The market recovery has also led to a narrowing in the price drop of pre-owned homes in major cities, with the average price of such houses in 100 major cities standing at CNY12,792 (USD1,857) per sqm last month, according to data from the China Index Academy. Despite the figure falling 0.3 percent from February, the decline narrowed from 0.5 percent that month, contracting for the third straight month.

Owners of smaller homes are becoming less willing to lower prices due to the relevant inventory continuing to decline, Li said. The narrowing of bargaining space in the market is a key reason why the drop in second-hand house prices has started to contract, Li pointed out.

Editor: Martin Kadiev