China construction updateFriday 21 Nov 2014 Chinese home prices fell for a fifth straight month in September, wiping out gains scored in the past year and raising expectations the government will have to implement more economic support measures to cushion the blow. The monthly falls left average home prices in 70 major Chinese cities down 1.3 percent in September from a year earlier, the first such drop since November 2012.The worst performance was in the eastern city of Hangzhou, where prices sagged 7.6 percent in September from a year before. “The property downturn is still the main drag on the economy,” Wang Tao, an economist at UBS in Hong Kong, said in a note. “The negative impact of the ongoing property downturn is being felt not only in heavy industry, but also in manufacturing investment.” The slowdown in the housing market followed GDP data showing the economy grew at its slowest rate since the 2008/2009 global financial crisis in the September quarter, adding to worries that it will drag on global growth. Chinese officials have indicated they would be willing to tolerate slightly slower growth as long as the job market continued to hold up, so there was some relief in the form of steady unemployment data. China’s urban registered unemployment rate was 4.07 percent at the end of September, down slightly from 4.08 percent at the end of the second quarter, the labour ministry said. In late September, China cut mortgage rates and down payment levels for some home buyers for the first time since the 2008/09 global financial crisis, its boldest step yet to energise an economy increasingly threatened by a sagging housing market. Although transaction data from private real estate consultancies pointed to a pick-up in sales in recent weeks, the impact of new government measures to provide cheaper loans to second-home buyers remains uncertain. “It still takes time to see whether a recovery of home sales will affect home prices,” Liu Jianwei, a senior statistician at the National Bureau of Statistics (NBS), said in a statement accompanying the data. Analysts concurred it was too early to tell if government moves in late September to lower mortgage rates and down payment requirements would be enough to stem the price slide. And even if prices do stabilise, developers will remain reluctant to start new projects until a glut of unsold homes is worked off, depressing demand for raw materials and keeping pressure on labour markets. “The weakest part of China’s economy is still the property sector,” said Wang Tao, an analyst at UBS in Hong Kong. “The government has relaxed some controls recently and property sales may pick up in the fourth quarter. However, we may not see improvement in sectors like heavy industry and we expect the economy to continue to slow down.” Source: Canada Wood
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