FX.co ★ Chinese real estate market may face another downturn

According to CNBC, on November 15, Chinese authorities reported a significant rise in retail sales and a decline in real estate investments. What an unexpected twist in the Chinese economy!

Reports indicate that recent government stimulus measures have bolstered various sectors of China’s economy. It seems they made the right call!

Data from the National Bureau of Statistics reveals that in October, retail sales in China grew by 4.8% year-on-year, surpassing the forecast of a 3.8% rise after an increase of 3.2% seen in September. Experts are impressed.

China's industrial production also advanced by 5.3% in October compared to 2023. However, fixed asset investments rose only by 3.4%, slightly missing the 3.5% forecast.

From January to October 2024, investments in Chinese real estate dropped by 10.3% compared to last year. This slump in the real estate sector continues to deepen, raising concerns among Chinese authorities.

Fu Linghui, a representative of the National Bureau of Statistics, highlighted the government’s earlier promise to halt the downturn in the real estate sector. According to analysts, there are signs of rapid improvement in the field.

Analysts predict that real estate investments may surge over the next 12–18 months. Sales of new houses have stabilized, slowing the annual decline. The value of new properties sold in the first ten months of 2024 fell by 20.9%. However, this is an improvement compared to September’s 22.7% drop.

Chinese authorities have been implementing stimulus measures since late September, triggering a stock market rally. The People’s Bank of China lowered interest rates and extended the already existing support measures for the real estate sector.

Additionally, the Ministry of Finance announced a five-year program to tackle local government debt, allocating 10 trillion yuan ($1.4 trillion). Further funding may also be on the table next year.