Pace of property activity decline is slowing
Despite China’s dismal August macro print, the property sector struck a somewhat positive note last month.
According to the stats bureau’s (NBS) monthly data for the sector, published Saturday:
- New investment in the sector contracted 10.2% y/y in August – the same as in July, but an improvement over June’s 10.8% decline.
- Home sales by floor space fell 14% y/y, better than July’s 14.5% drop. Notably, the pace of decline has now eased for four consecutive months.
- New construction starts – a key indicator of developers’ financial health and changing sentiment – fell 16.7% y/y, the third consecutive month of slowing decline.
More encouragingly, the buildup of unsold housing has steadily decelerated since May.
Get smart: Returning to healthier inventory levels is key to driving a price rebound and boosting homebuyer confidence.
- The recent slowdown in inventory buildup is a positive sign.
- Still, with unsold housing stock sitting 70% above pre-2020 levels, a nationwide recovery will likely take years.
Get smarter: To quickly cut down on excess housing, policymakers must find ways to speed up state-sponsored property acquisitions, which have stalled due to the program’s unsustainable economics.
- Any working solution would likely involve a boost in central government funding.
sources