China Housing Industry on the Path of Revival
Published By : 03 Jun 2015 | Published By : QYRESEARCH
China’s housing industry finally seems to be on the path of revival, market figures show. The 7 per cent hike in national property sales in the month of April was the first growth over the last 15 months. Prices for the 100-city index by Soufun stepped into positive territory in the month of May as well, thanks to the effect of recent monetary loosening and relaxation of property purchase rules.
This is good news for the Chinese economy as well as for the finances of the country. Including the indirect advantages to other industries such as glass, cement, furniture, and metals, construction and real estate contributes as much as 30 per cent of the gross domestic product (GDP), states Hong Kong based research firm Gavekal. Ratings agency Ficth anticipates that outstanding loans that use property in the form of collateral make up for US$ 3.6 trillion or 22 trillion yuan, which is four-fifths of the total figure.
However, analysts state that even if the housing industry does make a recovery and gain momentum, it is unlikely that the market will boost the growth of the economy in a manner it once did. The Chinese government hopes to keep growing at a rate of 7 per cent till 2020 but analysts believe that this will probably be too optimistic.
According to analysis by Rosealea Yao and Andrew Boston of Gavekal, the Chinese construction boom in the last decade was powered by upgrading. This is an event where in families put up their existing home on the market in order to purchase a bigger and fancier house, maybe to accommodate aging parents, a new child, or simply for a man cave.