China home sales surge despite cooling measures
Shanghai
CHINA'S moves to cool rampant property prices may have had an unintended consequence - unleashing a stampede of buyers seeking to get in ahead of further restrictions.
With attempts to avert a bubble intensifying - property curbs have been rolled out in at least 21 cities and developers even banned from using words such as "exclusive" and "cheapest" in advertising - that boon to realtors' pay cheques may be about to end.
That poses a dilemma for policymakers, who want to avert a potentially ruinous housing bubble without killing one of the economy's main pillars of growth. Most curbs introduced so far have been aimed at cooling property speculation by limiting people from buying multiple properties and raising down payment requirements, rather than shackling developers.
"The central government is cautious about the idea of property-led growth," said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group in Hong Kong. "While it helps stabilise economic momentum, it doesn't facilitate supply-side structural reforms."
The value of new home sales surged 61 per cent in September from a year earlier, almost double the pace of the previous month. The buoyant property industry helped the world's second-biggest economy grow 6.7 per cent in the third quarter from a year earlier, bang in the middle of the government's 2016 goal of 6.5 per cent to 7 per cent growth.
Developers - who had been exhibiting relative caution given their stockpiles of unsold homes in smaller cities - showed signs of buying into the boom.
New construction starts, a leading indicator of property investment, rose 14 per cent in September from a month earlier, the fastest pace since April, according to Bloomberg calculations based on official data released on Wednesday.
Developers bought 20 per cent more land by total value from a year earlier, the largest gain in two years. Completed investment in real estate development rose 5.8 per cent in the first nine months of the year, Wednesday's data showed, perking up slightly.
"The readings show the economy is quite stable for now, with support mainly from property and infrastructure," said Larry Hu, head of China economics at Macquarie Securities in Hong Kong. "The down cycle may start to show next year as the tightening measures on property start to weigh in."
With exports weighed by tepid global growth, a reversal in property would raise question marks over whether the economy's current stabilisation will hold in 2017.
"Growth in property investment won't soon see a quick plunge," said Chen Shen of China Securities. "But given signs the government will post tighter controls over developer financing and the land market, pressure is looming." BLOOMBERG
