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Author: Tan KW   |   Latest post: Tue, 23 Apr 2019, 6:44 PM


China’s property investment growth hits five-year high

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BEIJING: China’s property investment accelerated in the first two months of the year driven by strong demand in its hinterland and defying a decline in sales, government curbs in bigger markets and a broader economic slowdown.
Real estate investment, which mainly focuses on the residential sector but also includes commercial and office space, is a key driver of growth for the world’s second-largest economy.
It rose 11.6% in January-February from a year earlier, up from the 9.5% growth reported for the 2018 full year, data from National Bureau of Statistics (NBS) showed yesterday.
That marks the strongest growth for the January-February period since 2014, when it rose 19.3%.
The NBS said robust investment in the property sector was due to steady housing prices and an increase in property construction.
“China’s real estate market continues to show strong resilience,” said Yang Yewei, a Beijing-based analyst with Southwest Securities.
Developers say market sentiment has improved recently thanks to looser credit policies.
Beijing has also become less worried about cities easing existing curbs and is more concerned about the broader economic impact of the trade war with the United States.
“The market has obviously become better this month,” said a senior executive from a top Chinese developer, who declined to be named because he is not authorised to speak to media.
“The surge in investment is because many developers began construction on land to replenish their inventory as housing stock has kept falling,” he said, adding many tier-2 cities are running on merely three to four months of inventory.
But the cooling trend in sales suggests that such a rebound will be difficult to maintain while the real estate market still faces relatively significant downward pressure, Southwest Securities’ Yang added.
Housing transactions slowed as property sales by floor area fell 3.6% year-on-year in the first two months of 2019, easing from the 0.9% gain in December.
New construction starts measured by floor area were also much weaker, rising 6% in January-February from a year earlier compared with the 20.5% in December, according to Reuters calculations.
The NBS does not release individual monthly investment data for January or February but combines them to account for the seasonal distortions from the week-long Lunar New Year holiday, which typically falls in either month.
Slower sales continued to hit China’s real estate developers’ bottom line. They raised 2.45 trillion yuan (US$365.38bil) in the first two months of the year, up 2.1% from the same period last year, slower than the 6.4% rise in the full year of 2018, the NBS said.
The real estate market has shown signs of fatigue in recent months in the face of persistent government curbs on speculative investment, as Beijing is seeking to reduce debt risks in the financial system.
Failed land auctions in China have increased significantly since the second half of 2018.
Land transaction fees in 40 major Chinese cities fell 20.9% in January-February period from the same time a year earlier, according to the state-run Securities Times.
But policymakers are wary about not destabilising growth and have vowed to promote healthy development of the real estate market, which has for some time been one of the stronger parts of the economy.
 - Reuters 
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