Real estate sector is one of the key drivers in China’s economic growth and its recent gains contributed to an increase in the country’s economy in the first quarter of 2016.
According to a Bloomberg report, data from the National Bureau of Statistics showed that China’s real estate industry output saw a 9.1 percent increase in the first three months of the year, while the construction sector rose 7.8 percent compared to last year’s figures. The surge is largely attributed to surging home prices and property investment.
While the increase in the property sector helped drive the country’s economy, experts are still keeping an eye on the debt-driven expansion on whether it can prove to be sustainable for the government’s growth target of 7 percent.
Bloomberg quoted Zhou Hao, an economist at Commerzbank AG in Singapore, saying that, “Growth is still under pressure and the economy remains fundamentally weak.”
Home prices in the country jumped to record highs, with Shenzhen seeing 62 percent climb in new homes prices and Shanghai recording a 25 percent increase, Bloomberg noted.
To help cool down the red-hot market, which is driven by investors seeking safe haven for their money due to China’s economic turmoil, Chinese cities have been introducing housing measures. Following the latest increase in new house prices, Shanghai has limited the eligibility of buyers to acquire properties. Shenzhen and Nanjing last month introduced property curbs by increasing the required down payment and the number of years being employed in the country, as previously covered here on Realty Today.
Shenzhen raised the deposit requirements for first-time homebuyers who secured mortgages in the past two years and for some second-home buyers from 30 percent to 40 percent down payment. Nanjing increased the minimum down payment required from 20-25 percent to 30 percent for second-time buyers who apply for mortgages twice.