China’s Property Market Falls

Published on Author martint16

China’s property market continues to slide, despite several rounds of monetary easing, an article from the Wall Street Journal explains. Data released Wednesday showed property prices fell more than 5% in February compared to the year earlier. Declines are widespread, with 47 out of 70 cities experiencing price drops more than the national average.

One of the country’s larger developers, Guangzhou R&F, was the most recent to take a hit. It eliminated its dividend policy, withholding a payout for the first time since 2005. Shares were down 5.6% at close. Similarly, rival Country Garden cut dividends as well. More are expected. China Property

Spooked investors, who have caused the recent Chinese stock market downturn, are looking for a more intensive easing effort from Beijing to rescue the property market. One way would be a series of bank reserve requirement cuts, which seems more possible amid the recent data.



One Response to China’s Property Market Falls

  1. Well, my sense is the government is going to be slow to reassure real estate speculators. Unless the government starts buying up property, there’s no way to prevent a slide once one begins. For example, monetary easing doesn’t necessarily generate a buyer. That’s in part because low interest rates don’t offset credit risk: why would any financial institution want to lend to a developer on the ropes or a purchaser of potentially overpriced property?