BIGGEST DECLINE THIS YEAR: China property investment drops 12.3%

- Advertisement -

BEIJING- China’s property investment by developers further worsened in July, down the most this year, while new construction starts suffered their biggest fall in nearly a decade, amid still tight funding conditions and weak sentiment.

China’s property market, which accounts for about a quarter of the economy, has been in a prolonged crisis since the summer of 2020 as cash-strapped developers defaulted on loans and bond repayments, leading to unfinished projects. Wary buyer sentiment has also chilled new property investment by developers.

Property investment in July fell 12.3 percent year-on-year, widening from a 9.4 percent drop in June, according to Reuters calculations based on data from the National Bureau of Statistics (NBS) on Monday.

- Advertisement -

Property investment in January-July fell 6.4 percent from a year earlier, the most since March 2020.

“The recovery may be gradual and bumpy, a significant improvement in developer funding conditions may require more and broader easing, and there is a need for more policy support to restore confidence in the property sector and contain potential tail risks,” analysts at Goldman Sachs said in a research note.

In July, new construction starts by floor area fell at the fastest pace since January-February 2013 – down 45.4 percent – after a 45 percent slump in June.

In January-July, new construction starts tumbled 36.1 percent, extending from a 34.4 percent drop in the first half.

Cash-strapped real estate firms have suffered from tight credit conditions since 2020.For developers, loans granted by domestic banks dropped 36.8 percent, while capital raised from abroad plunged 200 percent in July, according to Reuters calculations from the NBS data.

Household loans, including mortgages, fell to 121.7 billion yuan ($18.00 billion) in July from 848.2 billion in June, the central bank said on Friday.

Reflecting the poor buyer sentiment, new home prices fell 0.9 percent on year in July, the fastest pace since September 2015, and extending a 0.5percent decline in June, Reuters calculations based on NBS data showed.

China’s economic recovery momentum slowed in July, but the economy remains resilient despite facing difficulties, Fu Linghui, a spokesman for the National Bureau of Statistics, said at a news conference on Monday.

Fu expects the economy to continue to recover and the employment situation to be generally stable, although employment pressure still exists.

Even if consumer prices see sharp rises in some months, he expects consumer inflation to remain at a reasonable level this year.

The comments came after data showed China’s economy unexpectedly slowed in July, with activity indicators from industrial output to retail sales missing forecasts by large margins, pointing to a shaky recovery as Beijing shows no sign of easing its zero-COVID policy. — Reuters

Author

- Advertisement -

Share post: