China property investment growth cools in Oct, sales decline accelerates

BEIJING: China’s October property sales and new construction starts fell in October as the property market cooled from a two-year boom in the face of a tighter liquidity environment and a crackdown on riskier lending.

Real estate investment growth also cooled in October, in line with expectations, as the government looks to engineer a soft landing for the property sector amid a gradual slowdown in China’s economy.

Real estate, which directly affects 40 other business sectors in China, is a crucial driver for the economy but also poses a major risk as Beijing looks to tame soaring home prices without triggering a crash.

Property sales by floor area fell by 6.0 per cent in October from a year earlier, compared with a 1.5 per cent decline in September, according to Reuters calculations. The decline was the biggest since the first two months of 2015.

“(That decline) is exactly what the government is looking for,” said Jonas Short, who heads the Beijing office at investment bank Sun Hung Kai Financial (SHKF). “What’s driving a lot of the declines, particularly in sales, is mortgage rates spiking up.”

Sales by value fell by 1.7 per cent on-year for the month of October, the first decline in monthly property sales value since March 2015, and compared to a 1.6 per cent gain in September. — Reuters