In the first two months of 2018, the total investment in real estate development reached 1.083 trillion yuan ($171.44 billion), up 9.9 percent year-on-year, said a National Bureau of Statistics (NBS) official on Wednesday.
The growth rate of investment in property development is 1 percentage point higher than in the same period of last year, NBS spokesperson Mao Shengyong told a media briefing in Beijing.
Analysts believe that the important drivers for real estate investment are the fact that construction started on large amounts of land at the beginning of the year, and the desire of property developers to push projects onto the market.
“After policy adjustments, China’s overall real estate market and housing prices have been relatively stable. Real estate investment has also maintained relatively reasonable growth. Commercial housing sales have maintained an increase overall around the country,” Mao told the media.
The sale of commercial buildings was valued at 1.25 trillion yuan, up 15.3 percent year-on-year. Of this total, the sale of residential buildings grew by 15.7 percent. The area of land purchased by real estate development enterprises was 23.45 million square meters, down by 1.2 percent year-on-year.
“While the increase in housing prices in intensively regulated top tier cities has slowed down, and some cities have seen a slight decrease in housing prices, housing prices are still rising overall across the country,” Zhang Dawei, chief analyst at Centaline, was quoted as saying in an interview with Beijing Business Today.
Mao pointed out that the rapid growth of investment in the first two months is due to many factors.
“Besides rising prices for land, the cost of raw materials and labor in the construction industry is rising. Even though the overall number of square meters of commercial housing sold in January and February compared with the same period in 2017 has declined, the overall price for countrywide commercial housing has remained stable. Investment in property development appears to be slightly higher than the same period last year,” Mao said.
Enterprises’ investment plan
The enthusiasm of real estate companies to develop new properties is another critical factor for investment growth, Yan Yuejin, a research director at Shanghai-based E-house China R&D Institute, told the People’s Daily on Thursday.
With the backdrop of the real estate market cooling down, development investment is seeing a clear rebound, Yan said.
Market outlook remains stable
Taking the restrictive policies on buying homes and the stable market into account, business insiders believe that the real estate market will remain stable.
According to the policy of the central government, “houses are for living in, not for speculation,” relevant departments will accelerate their work on increasing the housing supply from different sources and develop the housing rental market and shared-ownership housing. Property investment is expected to grow steadily, Mao said.
“To curb the rapid increase in housing prices, first-tier cities will also increase the supply of land. The overall real estate market is expected to maintain stable and rapid development in the future,” Mao added.
“According to key data for last two months, the overall real estate sales market outlook might not be optimistic for the first half of the year, but a recovery might fall in the latter half of 2018,” Yan predicted.
Some other analysts believe that while the government is stepping up efforts to rein in financial risks, the real estate market might remain tightly regulated. With the first quarter’s investment framework getting clearer, the latter part of 2018 might embrace a significant recovery.
China’s investment in residential buildings went up by 12.3 percent. Floor space of newly started houses was 177.46 million square meters, up by 2.9 percent year-on-year. At the end of February, the floor space of commercial buildings for sale was 584.68 million square meters, down by 4.55 million square meters compared with that at the end of last year. The funds in place for real estate development enterprises in the first two months reached 2.399 trillion yuan, up by 4.8 percent year-on-year, according to data released by the NBS.