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China’s property investment indicators hit records in July

Xinhua Financein CFBOND
2018-08-15 16:22

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According to data released by the National Bureau of Statistics on the August 14, from January to July, the real estate development investment was 6,588.6 billion yuan, a year-on-year increase of 10.2 percent, and the growth rate was 0.5 percentage points higher than that of January to June. Among them, investment in residential housing was 464.3 billion yuan, an increase of 14.2 percent, and the growth rate increased by 0.6 percentage points. According to industry insiders, the real estate market is still rising in July, and many indicators of real estate investment have set a new record. However, with the tightening of stable prices, stable housing prices, and stable expectations, the real estate investment can be hardly continue to grow at a double-digital rate in the next half of this year.
 
Data shows that from January to July 2018, the housing construction area of real estate developers was 7,285.93 million square meters, an increase of 3.0 percent year-on-year, and the growth rate was 0.5 percentage points higher than that of January to June. Among them, the construction area of residential housing was 5,020.37 million square meters, an increase of 3.9 percent. The new construction area was 1,147.81 million square meters, an increase of 14.4 percent, and the growth rate increased by 2.6 percentage points. The completed area was 420.67 million square meters, down 10.5 percent, and the decline narrowed by 0.1 percentage points.
 
Zhang Dawei, chief analyst of Centraline Property, said that the current upward cycle has sustained for over 38 months, the longest cycle in the history of China's real estate.
 
From the perspective of commercial residential housing sales, from January to July, the sales area of commercial housing was 899.90 million square meters, up 4.2 percent year-on-year, and the growth rate was 0.9 percentage points higher than that from January to June. The sales volume of commercial residential housing was 7.83 trillion yuan, an increase of 14.4 percent, and the growth rate was increased by 1.2 percentage points. This means that in the sales volume in July alone was 1 trillion yuan more than the sales volume of 684.61 billion yuan in the same period last year.
 
In terms of land acquisition, from January to July, the land acquisition area of real estate development enterprises was 138.18 million square meters, an increase of 11.3 percent year-on-year. The growth rate was 4.1 percentage points higher than that of January to June; the land transaction price was 661.9 billion yuan, an increase of 21.9 percent. The growth rate increase by 1.6 percentage points.

Shen Xin, researcher with Shanghai Federation of Social Science Associations (SFSSA), said that it should be vigilant is that except for first months in the year where witnessed abnormal increase, house prices in July for the first time have risen higher than land prices since May 2016. Data shows that since April 2018, the year-on-year growth rate of land prices has fallen for four consecutive months, while the year-on-year growth rate of house prices has risen slightly for four consecutive months. The year-on-year increase in house prices in July was higher than the year-on-year increase in land prices.

"It should be wary that the increase in land prices in July is lower than the increase in house prices." Shen Xin said that land prices have greatly driven house prices. Therefore, the weakening of land prices will lead house prices to lose a major support. Shen Wei believes that the Central Political Bureau meeting held at the end of July highlights the government’s resolution to control housing prices. Under the background of tightening regulation and tightening of the financial environment, the financing pressure on housing enterprises will gradually increase. It is expected that the market will remain stable in the coming months. The increase in various indicators will slow down.
 
Translated by Coral Zhong
 
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