Mainland Property Market to Stabilise in 2018

China property market

Since September 2016, China has launched a spate of curbing measures to put a brake on accelerating home prices, including capping the purchase of houses in major cities and trimming the amount of mortgage loans for potential homebuyers.

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Due to rapid urbanisation and driven by the current synchronised global recovery, a healthy overall inventory level and a robust mass housing market demand, we expect a stable growth in real estate development investment. Nonetheless, refinancing demand from property developers is estimated to reach a peak, leading to surges in both scale of bond issuance and financing costs in the property sector. In addition, benefiting from the government’s determination to reduce excess capacity, contain leverage, crack down on shadow banking and the real estate bubble, the property market is set for a healthy mid- and long-term development.

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In the coming six months, we expect to see total home sales decrease slightly as any chance of seeing property market cooling measures easing is rather slim. It might also be difficult to see a sharp property price rally in first- and second-tier cities. At most, a potential upside of home price increases is that it will help lay down the path of the country’s economic and money supply growth. At the same time, the development in the property leasing market will be another bright spot in the real estate landscape.

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