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China’s property investment slump deepens with home demand weak

China’s property investment slump deepens with home demand weak
Residential buildings in the Kangcheng neighbourhood of Shanghai, China, on Monday, 1 August 2022. (Photo: Qilai Shen/Bloomberg)

Chinese property investment slumped further in May, showing both extended weakness in a key engine for economic growth and the challenges facing the nation’s cash-strapped developers. 

Investment in property declined 7.2% in the first five months of 2023, worse than the 6.2% decline recorded in the January-to-April period and deeper than economists’ expectations of a 6.7% drop.

The poor data on property investment adds to other recent signs of weakness, with May home prices gaining just 0.1% on month, compared with April’s gain of 0.3%.

The property market has “has not yet fully stabilised,” said Bruce Pang, chief economist and head of research for Greater China at Jones Lang LaSalle Inc.

“The recovery in the supply-side of the property market is lagging that of sales,” Pang said. “Property developers are focusing on existing projects instead of expanding new projects, and they’re still in need of continued policy support.”

China is weighing up stimulus measures designed to support real estate, people familiar with the matter said earlier this month, aiming to boost a sector which is just not showing the kind of improvement the economy needs. Policymakers rolled out a 16-point rescue plan in November, but that has failed to unleash a big buying frenzy.

The nation’s property market is still in a “slow recovery”, National Bureau of Statistics spokesperson Fu Linghui said at a press briefing on Thursday after the data was released. He said he expects the sector to gradually stabilise as supportive policies are implemented and as market expectations improve.

The property slump has broad ramifications for the economy. Many projects have been halted, leaving some buyers stranded awaiting apartments they’ve already paid for. That is affecting employment, and delaying payments to suppliers and bondholders. Several large developers are trying to restructure their debts. 

One person familiar with the matter earlier told Bloomberg News that regulators are now seeking to lower costs on outstanding residential mortgages and boost re-lending through the nation’s policy banks to ensure homes are delivered. DM


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  • Scott Gordon says:

    And we think we have housing issues in South Africa .
    Not sure how the market will stabilize , 2 big developers have $350 b to pay back in July and August .
    Buyers for new builds have left the building .
    Too much risk in paying a mortgage , for 20 years if the place is never complete.
    If costs are reduced and rates cut the banks will make even less , most of them are in a bad way .
    There are sellers dropping prices , with no buyers in the 2nd hand market.
    That said , there are bargains to be had in certain parts of the country , cash deals basically .
    With many tech companies moving out has just added to the unemployed .
    From my view the ‘new ‘ housing market is basically a Ponzi scheme , in the past folks looked at buying and renting out , that can only last so long .
    Not sure how the big 2 can re negotiate $350 billion ? Who with ?
    That is just the debt due shortly , not working capital to complete the builds .
    I doubt there will be help financially from the central bank or govt.
    Will see what happens, not looking good .
    When sales are dropping month after month , hard to see any recovery there .

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