Chinese real estate sector enjoys strong growth

September saw Chinese real estate enjoy it strongest growth rate since May, as a result of increasing construction levels and rising prices, new data from Reuters has confirmed.

According to Reuters figures, based on data issued by the National Bureau of Statistics, (NBS) last month saw booming construction volumes, as well as high sales and prices, all of which led to economic expansion across the third quarter of 2016 of 6.7 per cent. This strong growth helped to offset ongoing weak exports levels.

Overall, property investment in the country increased by 7.8 per cent over the course of last month, when compared to the same time period a year prior. The figure was also a significant rise from the 6.2 per cent that was recorded in August of 2016, the data showed.

However, despite this positive news, property developers based across the country remained more cautious about taking on new projects, as a result of concerns relating to the Government rolling out more tightening measures in order to stave off a Chinese property bubble. Indeed, builder sentiment seemed to have already taken a hit, with new construction starts falling by 19.4 per cent over the month of September, the data showed.

Wang Tao, chief China economist at UBS, said: "Today's data showed developers are relatively cautious on new projects, because land has become rather expensive now, and such a strong sales momentum might not be sustainable moving forward."

Already, more than 20 cities across the country have rolled out restrictive measures, such as higher mortgage deposits and a ban on any second-home purchases, in a bid to stamp out the trend of speculative buying which is having an impact on the country's property sector.

Mr Tao attributed the fall in new construction starts last month to high base numbers recorded from 2015, saying that the level recorded was always going to be 'highly volatile.' He said: "The developers might have quickened the pace for investment, to finish the existing projects since sales performance was so great."

Overall, across the first nine months of 2016, a rise of 5.8 per cent in property investment levels was recorded, up from 5.4 per cent over the first eight months of the year. Last month alone, sold property levels rose by 34 per cent, the data showed, compared to the 19.8 per cent rise that was recorded in August 2016.

With Government policies laid out to end property speculation, experts expect the sales momentum to tail off gradually, with high investment levels tipped to remain until the end of the year.

Mr Tao said: "I think property investment will be able to support the economy in the next two months, but after that the supportive effects will be smaller."

Meanwhile, a spokesman for the National Bureau of Statistics, Sheng Laiyun, suggested that the Chinese property sector accounted for eight percent of China's GDP growth over the course of the first nine months of this year. He also felt that tightening measures rolled out by the Government would fail to have a "very big impact" on overall economic growth in the country.

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