Lex_China property:good things come
naky
www.diecastingpartsupplier.com
2015-11-24 15:24:42
Soaring house prices bring a smile to a homeowner’s face. Chinese property owners may have this thrill ahead of them, as supply continues to shrink.
Yesterday, data from China’s National Bureau of Statistics implied that average national property prices have stabilised, Reuters calculates. Shares in developers responded: Hong Kong-listed names including China Overseas Land
and China Vanke rose steadily during morning trading.
The data were not unequivocally bullish. New-home prices rose in roughly one-third of the 70 cities surveyed compared with rises in 39 last month; prices fell in 33 cities, too, more than in September.
This should not be surprising. Completed floor space available for sale is at a record high, sufficiently worrisome for Xi Jinping, China’s president, to highlight its reduction as a policy focus.
Still, as transaction volumes pick up, this overhang looks less concerning. Based on current activity, Barclays estimates that existing inventory will last eight months in 13 major cities it tracks. That has fallen from close to 10 months at the end of October, and from 14 months earlier this year.
While this metric depends on demand holding firm, current data imply that, in the longer term, supply is also set to moderate as investment in residential housing continues to fall. In the 10 months to October, floor space for newly started properties dropped 15 per cent year-on-year, said the NBS.
A newfound discipline is clear in some developers. In recent weeks, several listed companies, including China Resources Land, Country Garden
and Longfor Properties, reportedly pulled out of bids for
new land, deeming prices too high. According to Jefferies, property prices would have to rise 20 to 30 per cent for the margins to be healthy.
Current levels of activity suggest that such price rises may take some time to materialise. Still, with authorities cheering the sector on, it is no longer out of the question.