UPDATE 1-China Oct property investment slumps at fastest pace since early 2020

(Adds details and background)


Property investment falls 16.0% year-on-year in Oct


Property investment falls at fastest pace in 32 months


Property sales fall for 15th straight month in Oct

BEIJING, Nov 15 (Reuters) –

China’s real estate investment fell at the fastest pace in 32 months in October, as strict COVID-19 restrictions and property woes weighed, but an aggressive plan to restore liquidity in the sector boosted the outlook.

Property investment fell 16.0% year-on-year in October — its biggest drop since January-February 2020, according to Reuters calculations based on data from the National Bureau of Statistics (NBS). It slumped 12.1% in September.

NBS reports aggregated property investment data for January and February every year.

For the January-October period, property investment dropped 8.8% after decreasing 8.0% in the first nine months of the year.

China’s property sector, once a pillar of growth, has faced multiple headwinds since regulators sought to curb excessive borrowing from mid-2020. The clampdown has triggered falls in property sales, bond defaults and the suspension of housing construction, angering homeowners which have threatened to stop mortgage payments.

New construction starts measured by floor area by developers fell in the double-digits for the 15th straight month in October, down 35.1% on the year after a 44.4% drop in September.

Funds raised by developers fell 26.0% from a year earlier in October, after a 21.3% slump in the previous month.

Property sales measured by floor area dropped 23.2% year-year in October, falling for a 15th straight month, with buyers reluctant to take on more debt as the economy slows amid protracted COVID restrictions.

But Chinese regulators have outlined multiple financing measures for the cash-strapped industry, sources said, sending property stocks and bonds soaring on Monday.

Two sources told Reuters on Sunday a notice to financial institutions from the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) laid out 16 steps to support the property sector, including loan repayment extensions.

“We view this (the notice) as the most crucial pivot since Beijing significantly tightened financing of the property sector,” said analysts at Nomura in a research note.

“However, it could take a few more months for the property sector to recover due to the pandemic and Beijing’s reluctance to deregulate the sector and stimulate home demand in large cities.” (Reporting by Liangping Gao and Ryan Woo; Editing by Ana Nicolaci da Costa)

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