Housing Investments Keep Rising

19/05/2017

Image: Reuters/Thomas Peter

​​​chinaurbanisationnews

Even though intensified government controls to rein in the market continue to take effect, real estate investment keeps rising, suggesting robust growth of China's property market.

Image: www.tradingeconomics.com

Real estate investment is a major driver of the economy affecting more than 40 other sectors. But worries over the potential bursting of price bubbles in China's biggest cities have led to a flurry of government cooling measures in recent months as buyer demand appeared to be more resilient than expected.

​The area of property sold grew 15.7 percent in January-April from the same period a year earlier, down from 19.5 percent in the first three months of the year, the National Bureau of Statistics said.

​In April alone, sales grew 7.7 percent, the lowest since December 2015 and well short of the 14.7 percent increase in March. New construction starts measured by floor area, a telling indicator of developer confidence and correspondingly volatile, rose 11.1 percent in the first four months of the year, moderating from a 11.6 percent rise in the first three months, the bureau said.

Growth in property investment, which mainly focuses on residential but also includes commercial and office space, accelerated to 9.6 percent in April from a year earlier, compared to 9.4 percent in March, according to Reuters calculations based on data from NBS.

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Image: Economist

Prices in China's sizzling property market accelerated in March on a monthly basis, shaking off the impact of recent cooling measures introduced to dampen speculative demand.

In Shenzhen, the average transaction price for new homes has dropped for seven consecutive months, the Shenzhen Special Zone Daily reported recently. Data from the city’s urban planning, land and resources commission showed that 1,977 new homes were traded in Shenzhen last month, up by 146 percent compared with March. The average transaction price of new homes was 54,619 yuan (US$7,931) per square meter, a month-on-month decline of 0.2 percent.

Home prices in China's biggest cities were likely to rebound if government curbs were relaxed, a senior official from the country's top economic planner was quoted as saying in late April, suggesting authorities are in no mood to lift restrictions soon. 

​Some 1.7 trillion yuan ($247 billion) in property loans were issued in the first quarter of 2017, central bank data showed, reflecting robust demand in the sector. But analysts say China's hot property market appeared to have peaked and investment usually lags behind sales trends. Regulators intensified the crackdown on speculators by rolling out more draconian measures in big cities from late March.

China's liquidity conditions have also been tightened in the past few weeks, driven mainly by fortified regulatory efforts at financial deleveraging since late March. Various Chinese cities also adopted more lending restrictions to curb credit risks.

The rate of inventory destocking appeared to be quickening in response to robust demand in recent months. Growth in inventory floor area in the first four months was 7.2 percent lower than one year earlier, compared with a fall of 6.4 percent in the January-to-March period.

​Read the original article at Reuters, Shenzhen Daily

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