China's real estate investment fell by 10.2% in the first seven months of 2024, worsening from a 10.16% drop in H1. Property sales decreased by 18.6%, and new construction starts plummeted by 23.2%. Despite government efforts to revive the market, including reducing property purchase costs and mortgage rates, these measures have yet to reverse the decline. Funds raised by developers dropped 21.3%, exacerbating sector woes. The ongoing downturn reflects deep-rooted issues like overcapacity and high debt, compounded by slow GDP growth and geopolitical tensions. A full market recovery remains uncertain as challenges persist.
China's property investment continued to decline in the first seven months of 2024, reflecting ongoing struggles within the real estate sector. Investment in the sector fell by 10.2% compared to the same period last year, a slight increase from the 10.16% drop recorded in the first half of the year. This downturn occurs despite the Chinese government's recent efforts to rejuvenate the market through various support measures.
The decline in property sales has been substantial, with figures showing an 18.6% decrease in the floor area sold from January to July. This is a minor improvement from the 19.0% drop observed in the first half of the year, but it still indicates a significant contraction in market activity. Additionally, new construction starts have also plummeted by 23.2% year-on-year, slightly easing from a 23.7% drop previously.
One of the critical issues facing the sector is the continued reduction in funds raised by property developers, which fell by 21.3% compared to the previous year. This follows a 22.6% decline in the first half of the year. Despite these negative trends, the government has introduced several initiatives aimed at stabilising the market. These include reducing the cost of property purchases and lowering mortgage rates. However, these measures have yet to result in a substantial turnaround.
Industry experts highlight that the structural issues in China's real estate market are deep-rooted. The sector has been grappling with overcapacity, high levels of debt, and shifting buyer preferences. Moreover, the effectiveness of recent government policies has been limited by the ongoing economic uncertainties and a lack of consumer confidence.
Further complicating the situation, the broader economic environment in China remains challenging, with slow GDP growth and geopolitical tensions impacting investor sentiment. The real estate sector, which was once a major driver of economic growth, now faces a period of adjustment as it navigates these turbulent conditions.
In summary, while the Chinese government is actively working to support the real estate sector, the path to recovery remains uncertain. The combination of persistent declines in investment and sales, along with ongoing economic pressures, suggests that a full rebound may be a long way off.
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