China Property Investment Accelerate in October 2020

Beijing Property

In October, CHINESE new home prices rose at a slower monthly rate, data showed on Monday, as several developers moved to slash prices in order to encourage sales despite tighter government borrowing scrutiny.

According to Reuters estimates based on data published by the National Bureau of Statistics (NBS), average new condo rate in 70 major cities grew 0.2 percent in October from a month ago, the slowest monthly increment rate since March and down from September’s 0.4 percent growth.

Home prices grew 4.3 percent in October compared with the same month a year ago, easing marginally from September’s 4.6 percent rise.

The tightening measures introduced by several cities have begun to place pressure on growth in home prices, Zhang Dawei, a Beijing-based analyst with the property agency Centaline, said, especially as some have rolled out price limits on new home ventures.

Sales marketing strategies have weighed on prices in the light of growing housing availability during the conventional peak season, the analyst said.

Because of cheaper financing and looser buying controls in some towns, China’s huge property sector rapidly recovered from the coronavirus crisis earlier this year.

But since the beginning of the second half of the year with sales picking up momentum, policymakers have adopted a tougher approach, with regulators growing oversight of the funding practices of developers and buyers to stop rampant borrowing growth.

The NBS data on Monday also shows that, from 55 in September, the number of cities announcing monthly price rises for new homes dropped to 45 out of 70.

According to Reuters estimates based on data from NBS, China’s October real estate investment grew 12.7 percent from a year earlier, quickening from September’s 12 percent and the fastest rate since July 2018, in contrast to the softening price data.

Sales of property by floor space grew by a strong 15.3 percent, the best in more than three years, while new building starts increased by 3.5 percent, rising from the 1.9 percent decline last month.

The robust investment statistics was mainly guided by the activity of home building, as the buying of land by developers slowed after the 3rd quarter as regulators expected to implement rules to cut their debt levels,” said economist at Hwabao Trust, Nie Wen, based in Shanghai.” “I anticipate a strong 5-10% year-to-date increase in property expenditure to continue until the first half of next year if the present momentum in sales persists.”

The leadership of the Chinese Communist Party recently repeated its current strategy of discouraging property sector speculation.

Strict purchasing constraints and price limits are likely to stay in effect, analysts say, especially in other cities where pent-up demand is still robust.

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