For an economy facing its slowest economic growth in a quarter century, a 7.7% year-on-year rise in new home prices in December would seem to offer China some light at the end of the tunnel.
But the headline number, published by the National Bureau of Statistics on Monday, masks China's massive property problem - a vast amount of unsold apartments mainly in its smaller cities.
Property prices were rising fast in mega cities like southern Shenzhen, where prices rocketed by nearly 47%, Shanghai, up a healthy 15.5%, and Beijing, which posted a respectable 8% gain over a year ago.
But the recovery that began in October, after 13 months of straight decline, has only spread to just over half the 70 cities captured by official data, leaving others languishing far behind.
Wang Jianlin, China's richest man and chairman of property and entertainment conglomerate Dalian Wanda Group, said on Monday that it could take four to five years for the market to digest the inventory in tier three and four cities.
China has some 13 million homes vacant - enough to house the families of several small countries - and whittling down the excess is among Chinese policymakers top priorities for 2016.
Dalian Wanda expects a significant decline in real estate income as it diversifies its business away from property. But, planning an initial public offering, Wang reckoned the market would manage so long as authorities took a gradual approach to the inventory issue. "Sales are highly concentrated in first- and second-tier cities, where 36 top cities account for three-quarters of the total sales value. So the portion from third- and fourth-tier cities is very low. As long as they destock slowly, there is no problem," he told the Asia Financial Forum in Hong Kong.
Meantime, Wang said property investment in China's first tier cities was the most risky due to high land costs, and his firm's real estate focus is largely on the commercial sector in the lower-tier cities.
Still, analysts reckon it will take a lot longer before the price recovery translates into growth in property investment that can help the overall economy regain momentum. "Property investment is expected to see a single-digit decline this year despite recovering home prices, so it will continue to weigh on GDP," said Liao Qun, China chief economist at Citic Bank International in Hong Kong.
That will hardly dull the pain for investors worried by a depreciation in the yuan currency and crumbling stock markets since the start of the year.
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But the headline number, published by the National Bureau of Statistics on Monday, masks China's massive property problem - a vast amount of unsold apartments mainly in its smaller cities.
Property prices were rising fast in mega cities like southern Shenzhen, where prices rocketed by nearly 47%, Shanghai, up a healthy 15.5%, and Beijing, which posted a respectable 8% gain over a year ago.
But the recovery that began in October, after 13 months of straight decline, has only spread to just over half the 70 cities captured by official data, leaving others languishing far behind.
Wang Jianlin, China's richest man and chairman of property and entertainment conglomerate Dalian Wanda Group, said on Monday that it could take four to five years for the market to digest the inventory in tier three and four cities.
China has some 13 million homes vacant - enough to house the families of several small countries - and whittling down the excess is among Chinese policymakers top priorities for 2016.
Dalian Wanda expects a significant decline in real estate income as it diversifies its business away from property. But, planning an initial public offering, Wang reckoned the market would manage so long as authorities took a gradual approach to the inventory issue. "Sales are highly concentrated in first- and second-tier cities, where 36 top cities account for three-quarters of the total sales value. So the portion from third- and fourth-tier cities is very low. As long as they destock slowly, there is no problem," he told the Asia Financial Forum in Hong Kong.
Meantime, Wang said property investment in China's first tier cities was the most risky due to high land costs, and his firm's real estate focus is largely on the commercial sector in the lower-tier cities.
Still, analysts reckon it will take a lot longer before the price recovery translates into growth in property investment that can help the overall economy regain momentum. "Property investment is expected to see a single-digit decline this year despite recovering home prices, so it will continue to weigh on GDP," said Liao Qun, China chief economist at Citic Bank International in Hong Kong.
That will hardly dull the pain for investors worried by a depreciation in the yuan currency and crumbling stock markets since the start of the year.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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