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BEIJING, June 27 (Reuters) - Sales of new homes in China dropped 23 percent in the first six months of 2014 from a year ago, a private survey showed on Friday, underlining a sustained downturn in the housing market after a weak start to the year.
Sales of new homes in 40 big cities fell to 89.6 million square metres in the first half of this year, compared to 116.3 million square metres in the same period last year, according to a survey by CRIC, a unit of real estate services firm E-House China.
Yet despite the 23 percent decline in sales compared to last year, when the housing market was unusually buoyant, total transactions are still up 14 percent from the same period in 2012. Sales are also 13 percent higher compared to the first six months of 2011.
After a strong performance in 2013, China's real estate market has softened as banks become increasingly cautious about issuing mortgages and lending to developers, and as home buyers turn pessimistic.
The CRIC data showed average sales in China's wealthiest cities including Beijing, Shanghai, Guangzhou and Shenzhen slumped 37 percent in the first-half of this year. Beijing experienced the deepest fall at 49 percent.
In the smaller or "second-tier" cities, sales in the southern city of Xiamen dropped 44 percent in the first six months of 2014 compared to a year ago.
Transactions also fell 37 percent in the eastern city of Hangzhou and the northern city of Dalian, CRIC said.
For the smallest cities that are tracked by CRIC, sales in the eastern city of Yangzhou skidded 61 percent in the first six months and tumbled 54 percent in the eastern city of Wenzhou.
Analysts said sluggish sales and large inventories of unsold homes are likely to trigger deeper price cuts in more Chinese cities in coming months as developers try to generate cash flow.
Official data showed average home prices fell for the first time in two years in May as the housing cooldown spread to more cities. The retreat in the real estate market has raised concerns that it poses a growing threat to the wider economy. (Reporting By Xiaoyi Shao; Editing by Simon Cameron-Moore)