Friday, October 19, 2012

China building starts slump, bumpy road ahead

SHANGHAI - Property construction starts in China slumped last month, reversing gains recorded in August and indicating that any real estate market recovery in Asia's largest economy would be bumpy.

In terms of floor area, property construction starts in the January-to-September period fell 8.6 per cent to 1.35 billion square metres from the corresponding period a year earlier, data released yesterday by the National Bureau of Statistics (NBS) showed.

In September alone, building starts fell 24 per cent, compared to August's 13.9-per-cent gain, which had been the first month of turnaround since February, Dow Jones Newswires calculations showed. Mr Johnson Hu, an analyst at CIMB Securities, said: "The construction starts figure was weaker than expected. Perhaps there were fewer construction starts in smaller cities with high inventory levels."

However, building will pick up, Mr Hu added, saying there was a consensus that the property market had bottomed out in the third quarter.

This view is supported by data showing property development investment in China increased 15.4 per cent to 5.105 trillion yuan (S$995 billion) in the January-to-September period compared with the corresponding period a year earlier.

Residential property sales totalled 3.379 trillion yuan in the first three quarters, up 3.3 per cent on-year, NBS data showed. In September, home sales amounted to 541 billion yuan, up 9.5 per cent on-year, according to Dow Jones Newswires' calculations. The statistics bureau doesn't issue data for individual months.

China's real estate market has cooled amid the government's more-than-two-year-old campaign to rein in excessive price rises. But there has been a turnaround of late as Beijing sought to support first-home buyers as part of its efforts to prop up the slowing economy.

Meanwhile, another government survey showed average home prices in 70 Chinese cities were almost unchanged in September from August.

Prices of newly-built homes in 31 of the 70 cities included in the official survey rose in September compared with the previous month, down from the 36 cities in August.

Dow Jones Newswires' calculations showed prices in the 70 cities increased a marginal 0.01 per cent on average in September from a month earlier, compared with a 0.05-per-cent increase in August. DOW JONES

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