China property investment slows further, but slump in sales eases

BEIJING — Growth in China’s real-estate investment has continued to slow in the first 10 months to its lowest in more than five years, but property sales are showing signs of improvement, indicating that Beijing’s efforts to boost the sector may be starting to have an effect.

Property investment, which affects more than 40 other sectors from cement to furniture, grew 12.4 per cent in the January-to-October period from the corresponding period a year earlier, the National Bureau of Statistics (NBS) said yesterday. That compared with a rise of 12.5 per cent in the first nine months and was the slowest pace since July 2009.

“Slowing property investment growth has continued to drag on China’s broad economy. We expect the trend will continue in coming months even though sales picked up,” said China Development Bank Securities economist Du Zhengzheng in Beijing.

Property sales fell 1.6 per cent last month in terms of floor space, improving substantially from September’s 10.3 per cent drop, after the Chinese authorities announced steps in September to support the sluggish housing market, including lower mortgage rates and down payments for certain categories of home buyers.

“Those are early signs that there may not be a collapse of the property market and that the recent measures may have stabilised the momentum of property investment,” said Citigroup economist Ding Shuang in Hong Kong.

The NBS data also showed that mortgage loans to home buyers dropped 4.3 per cent in the first 10 months, easing from the drop of 4.9 per cent in the January-to-September period, as banks quickened their mortgage approvals and started to provide preferential rates to some home buyers.

Home loans were significantly cheaper last month than in September, The Financial Times’ China Confidential report said. About 16 per cent of real-estate companies surveyed said first-time home buyers were able to secure a mortgage below the benchmark lending rate, up from only 2 per cent in September.

Financing costs were also lower for existing home owners wanting to move to a new property, with 15 per cent of developers surveyed saying second-time buyers did not have to pay above the benchmark rate, up from 3 per cent in September, the report added.

Still, analysts doubted whether the government moves in September would be enough to stem the weakness in the property market as a glut of unsold homes continues to hang over the market.

As the property sector accounts for more than 15 per cent of China’s annual economic output, the prolonged cooling of the housing market poses the biggest risk to growth in the world’s second-largest economy, with the spillover effect expected to hit its trading partners across the region.

“The No 1 exposed economy is Hong Kong, but Australia is right after that. Australia is the most geared into the China investment story,” Mr Paul Gruenwald, Standard & Poor’s chief economist for the Asia-Pacific said yesterday, the Sydney Morning Herald reported. AGENCIES