Thursday 28 Mar 2024
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BEIJING (Oct 21): Growth in China real estate investment slowed in the first nine months of 2014, while property sales and new construction tumbled, helping to drag broader economic growth to a near six-year low.

Real estate investment, which affects more than 40 other sectors from cement to furniture, rose 12.5 percent in January- September from a year earlier, down from 13.2 percent in the first eight months of the year, the National Bureau of Statistics said on Tuesday.

Revenue from property sales dropped 8.9 percent during the same period, while new construction fell 9.3 percent. Mortgage loans fell 4.9 percent by value in the nine months, though they did tick higher in September. (For a table with detailed breakdowns, see )

The figures were released alongside data showing the world's second-largest economy grew 7.3 percent between July and September from a year earlier, slightly above expectations but down from 7.5 percent in the second quarter and its weakest expansion since the global financial crisis.

"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."

In late September, China cut mortgage rates and downpayment levels for some home buyers for the first time since the 2008 global financial crisis, making one of its biggest moves this year to boost an economy increasingly threatened by a sagging housing market.

But analysts said it is too early to tell if the move will halt price declines, which have spread to a record number of Chinese cities. Developers have massive inventories of unsold homes and banks remain reluctant to extend new loans and increase their exposure to the ailing sector.

"The policies unveiled at the end of September to support real estate lending cannot lift the whole sector in the near term," said Du Changchun, an Shanghai-based analyst at Northeast Securities.

Facing a tougher time getting credit, developers have been cutting prices and offering increasingly sweeter promotions to entice home buyers and reduce the backlog of unsold units. They have also been cutting back on land purchases, which is crimping revenues for local governments, many of which are saddled with high levels of debt.

"Many developers are controlling their gearing by buying less land and slowing construction," said Kim Eng Securities analyst Karen Kwan in Hong Kong.

"They're still waiting for a good time to buy, but this won't come until there's a change in financing signals."

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