Brokers out of commission as developers delay payments

On a year-on-year basis, new home prices increased 5.6 percent in May, down from a 6.7 percent rise in April and the slowest annual rise in 13 months.

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Sales also fell. Floor area sold in the month dropped 10.8 percent from a year earlier, while contracted sales value decreased 11.3 percent.

Liu Jianwei, a senior NBS statistician, said in a news release accompanying the data that the price declines in May were caused by a combination of high inventories, developers' promotions and buyers taking a wait-and-see stance amid unclear market conditions.

The China Banking Regulatory Commission said on June 6 that it's closely watching developers' cash flows and the impact on the banking system.

In a report last month, Goldman Sachs Gao Hua Securities Co Ltd wrote that China's 110 listed property companies' cash inflows from sales fell 35 percent quarter-on-quarter in the first quarter.

Meanwhile, the ratio of their capital expenditure to their cash inflows from sales rose to 117 percent in the first quarter from88 percent in the fourth quarter. That was the highest level since the first quarter of 2010, when the ratio was 130 percent.

Second-quarter data isn't yet available.

Shi Hongrui, managing director of Shanghai-based Hanyu Property, told the Oriental Morning post on Monday that developers owe the brokerage 120 million yuan ($19.5 million) in commissions, accounting for 30 percent of its revenue last year.

"Some big developers don't pay us cash at all and give us apartments as commission." Shi told the Shanghai-based newspaper.

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