Is China’s property at a turning point?

The property sector could be at a turning point based on some recent signals, ahead of today’s property price index reading at 9:30am (SGT).

China flags at a store
Source: Bloomberg

While real estate investment growth has slowed down in the first 10 months of 2014, we have been seeing property sales showing some signs of improvement.

This is good news for the rest of the economy as the property sector affects more than 40 other industries, from construction to furniture.

According to data released earlier this month, property investment grew at its slowest pace in over five years, just 12.4% from the previous year, and under the 12.5% reading from the previous month.

On the brighter side, property sales for October eased just 1.6%, an improvement from the 10.3% dip in the previous month.

This makes the latest housing price index reading one-to-watch, with the latest print showing that a drop in new home prices spread further to a record 69 out of 70 cities, up from 68 out of 70 cities.

That print showed that September’s price index declined by 1.3%, a break into negative territory for the first time in nearly two years. The Index had been hovering around a reading of 10% in January before drifting to just 0.5% in August.

Will we see prices finally bottom out and consumer confidence return to the market? This could happen if the central bank’s recent efforts come into fruition.

It had eased mortgage lending restrictions in September for the first time since the financial crisis. This means people can apply for a mortgage for a second home and enjoy a lower-down payment requirement.

Any bounce in the price index today could prompt some optimism in the property stocks such as China Evergrande, Vanke, and China Overseas Land.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.