SHANGHAI—China’s weakened housing market continued to pinch China Vanke Co. , as the major property developer posted a 2.8 per cent profit gain and nearly flat revenue after rolling out fewer projects than planned.
The third-quarter results are the latest indication of the severity of the downturn in China’s property market. Vanke, based in the southern Chinese city of Shenzhen, warned of further pain in the broader market amid a glut of homes in many Chinese cities.
“In the short term, the situation of new supply exceeding transactions remains unchanged and inventories are rising,” Vanke said late Sunday in a stock-exchange filing.
China’s property market is an important driver of Chinese economic growth. The property downturn has prompted Beijing to ease some policies to boost the flagging market, as part of efforts to prevent a sharper-than-expected economic slump.
Housing sales have declined 10.8 per cent by value in the first three quarters of the year from a year earlier, according to government figures, while average home prices in 70 Chinese cities declined year-over-year in September for the first time in nearly two years.
China’s central bank and banking regulator told banks late last month to loosen mortgage rules to allow more second-home buyers to qualify for cheaper loans.
“These policies and measures, to a certain extent, are conducive to reinforcing market confidence, facilitating the release of housing demand, and are believed to be beneficial to future market development,” Vanke President Yu Liang said in written remarks.
At the same time, Vanke’s results showed that it is doing better than smaller peers who are less able to withstand the drop in property prices and the glut of homes in the world’s No. 2 economy. Larger Chinese property developers have better access to funding and are less dependent on individual cities.
Many smaller property developers in China have reported a fall in their third-quarter earnings in recent weeks. According to data provider Wind Information, more than half of the property developers that have reported earnings have shown a fall in profit or a loss during the third quarter.
As of the end of September, the company’s debt-to-equity ratio was at 26.2 per cent, relatively low in the industry, Vanke said.
Vanke said in its filing with the Hong Kong Stock Exchange that its profit for the quarter totaled 1.65 billion yuan (US$270 million), compared with 1.6 billion yuan a year earlier. Revenue rose less than 1 per cent to 20.82 billion yuan.
Vanke’s property sales rose 7.4 per cent to 48.15 billion yuan during the third quarter from a year earlier. In terms of floor area, sales rose nearly 16 per cent over the same period.
The company timed more project completions for the fourth quarter, compared with what it had done in previous years, Vanke said in its statement. Among Chinese-listed developers, revenue is typically recorded when property is completed.