China’s biggest homebuilding slump in
at least four years isn’t enough to dissuade a majority of
economists from predicting real estate will still contribute to
2014 growth. Property controls will be eased, they said in a
Bloomberg News survey.
While 12 of 18 economists say China has some national
oversupply of housing, only seven say the market is in a bubble
state countrywide, according to the survey conducted from May 15
to May 20. Half see bubbles in some cities, and a majority says
the loosening of restrictions on home purchases and loans will
be limited to a regional level.
New construction has fallen 22 percent and sales have slumped 7.8 percent this year, testing the government’s four-year commitment to curbs targeted at making homes more affordable and its reluctance to enact broader economic stimulus. The slowdown’s depth will have implications for everything from demand for Australian iron ore to land sales that help local governments repay their $3 trillion of debt.
“China won’t fully lose the engine, but the engine will roar less than in the past and will be a more moderate supporter for growth,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank.
Central bank Governor Zhou Xiaochuan said China may have housing bubbles in some cities, an issue that’s difficult to resolve with a single nationwide policy. The economy “can still manage something around a 7.5 percent growth rate,” Zhou said in an interview in Rwanda yesterday, referring to the nation’s expansion target for 2014.
While 12 of 18 economists say China has some national
oversupply of housing, only seven say the market is in a bubble
state countrywide, according to the survey conducted from May 15
to May 20. Half see bubbles in some cities, and a majority says
the loosening of restrictions on home purchases and loans will
be limited to a regional level. New construction has fallen 22 percent and sales have slumped 7.8 percent this year, testing the government’s four-year commitment to curbs targeted at making homes more affordable and its reluctance to enact broader economic stimulus. The slowdown’s depth will have implications for everything from demand for Australian iron ore to land sales that help local governments repay their $3 trillion of debt.
“China won’t fully lose the engine, but the engine will roar less than in the past and will be a more moderate supporter for growth,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank.
Central bank Governor Zhou Xiaochuan said China may have housing bubbles in some cities, an issue that’s difficult to resolve with a single nationwide policy. The economy “can still manage something around a 7.5 percent growth rate,” Zhou said in an interview in Rwanda yesterday, referring to the nation’s expansion target for 2014.
