China's property market diverged further in the first quarter, with a slowdown in new commercial and residential housing sales and an uptick in affordable housing investment and high-end houses.
Vanke, the country's largest developer, reported on Sunday that its net profit in the first quarter of this year more than halved year on year, citing a high comparison base and little project settlement.
Ten Fitch-rated Chinese homebuilders, including leading developers Poly and China Overseas Land, reported negative year-on-year contracted sales growth in the first three months of this year.
Only six of the 20 best-performing real estate developers reported year-on-year growth, while others suffered an average year-on-year fall of 15.37 percent in the first quarter, according to the statistics from CRIC China, a property consulting firm.
While the new commercial and residential property market lost steam in Q1,the Chinese government has been lending more to the property sector, especially affordable housing projects, during the past three months.
Outstanding yuan-denominated loans to the property sector at the end of March stood at 18.4 trillion yuan (3.02 trillion U.S. dollars), up 19.4 percent from the previous year, the central bank said on Friday.
Loans to affordable housing construction hit 1.28 trillion yuan at the end of March, up 64.3 percent year on year.
January-March, loans to affordable housing construction grew by 135 billion yuan, 86 billion yuan more year on year, 43.7 percent of all lending to the property sector. The ratio was 24.4 percentage points higher year on year.
Fitch Ratings said there were signs the slide is bottoming out thanks to a string of government support policies such as down payment cuts, home sales tax exemption and land supply and usage conversion.
High-end property saw surging growth after the central bank reduced the down payment ratio for second homes on March 30. Sales of houses with an average price above 100,000 yuan per square meter grew four fold year on year during the past three weeks, according to data from Centaline Group.
Zhang Dawei, a senior analyst with Centaline, predicted that sales of second homes would pick up in May due to expectation of further interest rate cuts by the central bank.
"It is obvious that government-subsidized housing and second homes are getting more policy support," said Chen Huai, a property expert with China Academy of Social Sciences.
The government will take more steps this year to rebuild poor housing, targeting one million homes in rural China and one million in cities, according to this year's government work report.
"Rebuilding urban and rural rundown areas may help optimize structural development of cities from within instead of expansive urbanization," Chen said.