Growth of investment in China’s property sector continued to decline in December, dropping to 1 per cent, the slowest growth in almost seven years even as national sales improved, official data showed on Tuesday.
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But the headline number, published by the National Bureau of Statistics on Monday, masks China’s massive property problem – a vast amount of unsold apartments mainly in its smaller cities.
Other data on Tuesday suggested China’s economy continued to lose steam late in the year, dashing hopes that a year-long flurry of government measures were finally beginning to take effect.
New housing starts declined 14 per cent as developers tried to sell off bloated inventories of unsold homes, though inventory floor area was still 15.6 per cent higher than a year ago, but down from 16.5 per cent growth in November. “But we’re not talking about the third-tier cities here”.
China has been performing strongly during recent years, but the country is burdened by weak exports, sluggish investment, factory overcapacity and high debt levels.
The poll was more gloomy about 2016, forecasting growth of just 6.5 percent. 39 out of 70 major cities saw the price of new homes rise above November level. The growth rates were up 1.2 percentage points and 1.4 percentage points respectively from November.
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In addition, the central bank past year also scaled back down-payment requirements for purchases of first and second homes, allowing buyers to borrow more. However, what catches more eyeballs are the regional divergence in home prices. “So I think the peripheral second and third-tier cities will benefit more this year”, Samuel Wong, chief operating officer at Midland Realty in Shenzhen.
