HomeEconomic IndicatorChina's property sales and investment decline hinder economic recovery, says Reuters report,...

China’s property sales and investment decline hinder economic recovery, says Reuters report, sans complex terms or jargon. (15 words)

China’s Property Market Struggles amid Sales and Investment Declines

China’s property market continues to face challenges as both sales and investment experience significant declines. Despite efforts to support major cities, the industry is struggling to recover from the crisis caused by the COVID-19 pandemic. However, the contraction rate has slowed down, offering a glimmer of hope for the future.

Property Sales Decline, but at a Slower Pace

In September, property sales by floor area fell by 19.77% compared to the previous year, a slight improvement from the 23.95% decline in August. This indicates that the sector is undergoing a correction disrupted by the ongoing pandemic and the government’s efforts to control debt. Home sales in September were 64.73 million square meters lower than the same period in 2019, marking the highest decline in three months.

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Struggles to Regain Footing

The property sector is grappling with an oversupply of homes and low consumer confidence. While support measures have provided a temporary boost in tier-one cities, the rest of the country is still facing challenges. This imbalance has hindered the industry’s recovery and has had a significant impact on various sectors of the economy.

Debt Crisis and Its Impact on Growth

The prolonged debt crisis in the property sector, which accounts for nearly a quarter of China’s economic output, has been a major drag on the country’s overall growth this year. The International Monetary Fund has even downgraded its growth forecasts for China, citing the property market slowdown as a key factor. This has prompted calls for more policy support to address the weakness in the market.

Property Investment Takes a Hit

Property investment also saw a decline, falling by 18.7% compared to the previous year. This follows a 19.1% drop in August. S&P Global Ratings expects that property sales will remain depressed due to factors such as low construction starts, inventory overhang in lower-tier cities, and tightening escrow restrictions. The agency even predicts a further 5% drop in sales by 2024.

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Challenges Ahead

Despite China’s economy growing at a faster-than-expected rate in the third quarter, the property market remains a significant hurdle. The sector’s struggles have dampened growth in various industries, and the effects of the ongoing crisis are likely to persist. It is crucial for policymakers to closely monitor the situation and provide further support to ensure a sustainable recovery.



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