2015-01-19

Chinese Real Estate Investment Contracts in December

The headline says 10.5% growth, but that is the YTD figure. Chinese real estate investment in the month of December 2014 was down 1.9% from December 2013. The lowest growth rate during the financial crisis was 1% yoy growth in February 2009.

Since the trend is still down, the headline number in 2015 could well be negative. To give an idea of what that means in terms of GDP, consider some numbers tossed around by analysts: Man Made Chinese GDP
[Soc Gen] In summary, we think that real estate investment growth will continue to trend lower, likely to the level of 5% yoy (from 12.5% in June), a level last seen during the 2009 downturn. The IMF once estimated that a 1% decline in China’s real estate investment would shave about 0.1% off China’s real GDP within the first year. And so a 7.5ppt deceleration in real estate investment growth would drag down GDP growth by about 0.75ppt.

If the December growth rate represents trend and the IMF model isn't bunk, GDP should be shaved by 1.4%. From the latest 7.3% rate in Q4, that comes to 5.9%.


In November, the single month yoy growth rate was 7.6%.

Full NBS report in Chinese here.

Charts from that report after the jump.


Real Estate Investment Growth Rate

Land purchases by developer (area)

New Home Sales By Area (yellow) and Yuan (blue)

Developer Capital

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