Developers still waiting for official actions to stimulate construction activity (China)

Chinese officials remain reluctant to ease up on the strict measures implemented in 2010 and 2011 to deal with overheating in the construction sector. Even with the slowdown in economic growth, officials continue to press with the measures. Economic experts and representatives of the construction sector are now calling for a lifting of restrictions. Some local and provincial administrations have even moved ahead with their own measures to revive their flagging building sectors. Construction activity is especially important for local administrations as it allows them to raise money from the sale of land use rights.

Apartment prices continue to decline. Official figures show that May prices for both new and old apartments were about 1 % cheaper than at the start of this year. Official figures for apartment prices indicate the changes are quite modest, and the statistical data is believed to be somewhat sketchy. Builders themselves claim prices have dropped substantially more than the official numbers and say they expect the decline to extend through this year. Falling prices translate into fewer apartment sales.

Several corporate surveys indicate builders remain broadly pessimistic about the outlook for their industry. Builders have purchased fewer land use rights this year than earlier. In the January-May period, new housing starts were down nearly 10 % y-o-y. Differences across provinces are large, however. For example, housing starts in Beijing are down by a third from last year, but in some interior provinces starts on new apartment construction are still climbing rapidly.