With Chinese real estate sales growing 60% in the first half of the year, analysts are predicting this trend to continue through next year. The meteoric growth, however, has led some to worry about the sustainability of the market. See the following article from Property Wire for more on this.
Property investment growth in China could reach 30% next year and is a crucial factor in the country’s economic recovery, leading financial analyst claims.
‘As property developers rush to buy land and plan construction this year, investment activities will soon pick up pace,’ Fan Gang told a forum in Beijing.
He is the academic member of the monetary policy committee at the People’s Bank of China.
The recovery in China’s real estate market is now well underway with property sales surging 60% by value in the first seven months and home prices in 70 major cities rising the most in nine months in July from a year earlier.
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Much of the credit for the turnaround is given to Premier Wen Jiabao’s $585 billion stimulus plan alongside an explosion of lending.
Although some experts point out that the 11.6% expansion of property investment in the first seven months was still a third behind the pace in 2007, before the property slump started.
Few doubt the recovery is unsustainable.’A rebound in real estate investment will be the next engine supporting economic recovery after the government-led infrastructure construction plays a dominant role stimulating growth this year,’ said Lu Zhengwei, an economist at Industrial Bank in China’s financial capital Shanghai.
He too is predicting massive growth but would prefer a slightly slower pace.
‘Growth of 20 to 25% in real estate investment is healthy, whereas a 30% pace may trigger concern about overheating in the property sector,’ he added.
Property investment accounts for a third of overall fixed-asset spending in China which is regarded as the world’s third-largest economy.
Fan also said that the government’s recent fine-tuning of monetary policy should be no surprise because the central bank has to prevent excessive liquidity and that the decline of the stock market on concerns that loan growth will slow is ‘a very good sign’.
China’s investors ‘have finally learned to respond to risks rather than believing that the market will rise forever,’ Fan added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.