Healthy growth needs housing flux and more
Updated: 2016-04-19 08:05
By Luis Kuijs(China Daily)
|
|||||||||
Chinese homebuyers look at housing models of a residential property project during a real estate fair in Shanghai, China, May 2, 2015. [Photo / IC] |
China's real estate sector, sometimes considered the world's "most important" sector in terms of its impact on the global economy, is in flux again. After a pronounced fall in 2014, housing sales have been on the rise since early 2015, largely because of policy support-including an easing of house purchase restrictions, lower interest rates and rapid credit growth. As always, the recovery in housing sales has caused prices to pick up again.
The recovery in sales was to be expected, given the significant relaxation of policy and the presence of some pent-up demand. What is more surprising to us (at Oxford Economics) is that housing starts and construction picked up early this year. We had not expected this because, in our view, the incentives for new construction are still weak given the large inventories of unsold housing.
The uptick in construction has had major economic impacts. Within China, it seems to be a key reason behind the tentative bottoming out of the overall growth momentum recently. Internationally, the recovery in China's real estate sector, and in its economy more generally, has been a key driver of the recent recovery in raw commodity prices and commodity-related asset prices, including currencies of commodity-exporting countries.
Nonetheless, we remain skeptical whether the pick-up in construction can be sustained, given the still high inventories of unsold housing, as a share of sales. The ratio of inventories of housing on which construction has started but are unsold, as a share of sales, declined through 2007, but then rose to reach the equivalent of two years of sales in 2014. It fell somewhat last year but remains high. National Bureau of Statistics' data on the stock of housing "waiting for sale" only include inventories that are (officially) completed. But they tell a broadly similar story.
Related Stories
Debt concerns plague housing market, SOEs, technocrat says 2016-04-18 07:50
China's least affordable housing market: Shenzhen 2016-04-15 13:36
Shanghai, Shenzhen see fall in housing market after new curbs 2016-04-08 16:16
Beijing housing market rebounds in March 2016-04-05 15:34
Today's Top News
Inspectors to cover all of military
Britons embrace 'Super Thursday' elections
Campaign spreads Chinese cooking in the UK
Trump to aim all guns at Hillary Clinton
Labour set to take London after bitter campaign
Labour candidate favourite for London mayor
Fossil footprints bring dinosaurs to life
Buffett optimistic on China's economic transition
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Sinopec opens new industrial platform |
Data point to Chinese economy shrugging off sluggishness and stabilizing |
China leads way on US adoptions |
Season of the locust eaters |
Humble bicyclist becomes Beijing nighthawk |
Chinese must adapt to UK 'study shock' |