China property hit by rare convergence of demand, supply declines

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BEIJING (Businesshala) – China’s property woes worsened on all fronts last month, as prices for both new and resale homes fell amid a deep contraction in construction starts and investment by developers in a rare confluence of declines in the region. put pressure on

FILE PHOTO: Apartment blocks are pictured in Beijing, China December 16, 2017. Businesshala/Jason Lee/File photo

The Chinese property market, accounting for a quarter of GDP by some metrics, has slowed sharply since May, with sentiment increasingly shaken by tensions in the sector in the wake of the escalating liquidity crisis, which has hit some of the country’s most Large and most surrounded. Indebted Developers.

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However, most analysts expect demand and supply to return to normalcy by the end of the year or early 2022 as regulators change their policies to stabilize the sector.

Prices of new homes fell an average of 0.2% from September the previous month, according to a Businesshala count of data released by the National Bureau of Statistics (NBS) on Monday, the first drop since March 2015. In the resale market, prices declined in all but six of the 70 major cities tracked by the bureau.

On the supply side, new construction began to fall 33.14% year over year in October, extending a 13.54% decline in September, while overall investment by developers in projects dropped 5.4%, deepening from a 3.5% drop a month earlier, NBS reported. Count data shown.

Strict regulations on new lending since the summer of last year have squeezed developers financially and cast a long shadow over new projects. China is expected to stick to policies to curb excess borrowing by developers and speculative home purchases, though it has eased financing terms to help genuine home buyers.

regulatory target stability

“Overall, the ‘bottom’ of real estate policies has emerged, but the market is still adjusting to the downside,” said Zhang Dawei, chief analyst at property agency Centreline.

“Policies will become more and more relaxed, and the market is expected to gradually stabilize, as the rules aim to stabilize the market, neither rising nor falling,” Zhang said.

Officials said in September that banks should offer financial assistance to genuine home buyers with so-called “hard” demand, those looking to buy or rent low-cost housing from recently married people.

New mortgage loans jumped 40% from the previous month in October to 348.1 billion yuan ($54.55 billion), though the amount was just 7% higher than the monthly average in the first nine months of the year.

Some Chinese banks have ramped up disbursement of home loans in recent weeks to support sentiment among buyers, but no fresh wave of new approvals has been given to lenders, bankers previously told Businesshala.

“The market is expected to decline towards the end of the year or early next year,” said Xu Xiaole, analyst at Bick Research Institute, “as the supply and demand for collateral will return to normal.”

In October, 13 out of 70 cities saw monthly price increases, with less than 27 cities registering price increases in September, the smallest number since March 2015.

During the month, home sales fell 22.65% to 1.24 trillion yuan, a Businesshala calculation showed, the fourth straight decline and the lowest this year.

In the resale domestic market, prices declined in 64 of the 70 major cities tracked by NBS, with two unchanged and four with higher prices.

So far this year, resale prices have dropped in almost all cities, with at least 20 cities seeing declines in five months or more. In the southern tech hub of Shenzhen, prices have dropped for six consecutive months.

($1 = 6.3818 Chinese Yuan Renminbi)

Reporting by Liangping Gao and Ryan Wu; Editing by Christian Schmollinger and Sri Navaratnam


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