China's Real Estate Market Shows Signs of Stabilization after Macro Control Policies

Strategic Insights -

China's real estate market has demonstrated signs of stabilization in 2005, following a series of macro control policies implemented to curb overgrowth of investment in the sector. The overheated demand for houses has cooled down, and the supply and demand relations on the real estate market have improved, creating conditions for a stable housing market. The implementation of macro control policies, including tightening land-use examination and approval and credit extension, has resulted in a slowdown in growth of investment in real estate development, which was 19.8% year on year, 8.3 percentage points lower than in 2004 and 7.4 percentage points lower than fixed assets investment in urban areas.

Key Takeaways:

  • In 2005, China's real estate development investment reached 1.5759 trillion yuan, a 19.8% year-on-year growth, 8.3 percentage points lower than in 2004.
  • The growth of investment in real estate development has been lower than that of fixed assets investment in urban areas for eight consecutive years.
  • Land supply for real estate developers decreased by 20.2% in 2005 compared to 2004, but the proportion of land supplied for construction of economy houses increased by 0.7 percentage points.
  • The outstanding commercial loans to real estate development totaled 2.77 trillion yuan by the end of 2005, up 16.1% year on year, 12.6 percentage points lower than at the end of 2004.
  • The outstanding loans to personal houses was 1.84 trillion yuan, up 15.8% year on year.
  • Real estate prices in 70 large and medium-sized cities have fluctuated slightly since the latter half of 2005, with some cities experiencing a steady decline in house prices.

Statistics:

  • *Investment in real estate development*: 1.5759 trillion yuan in 2005, a 19.8% year-on-year growth.
  • *Land supply*: Decreased by 20.2% in 2005 compared to 2004.
  • *Commercial loans to real estate development*: 2.77 trillion yuan by the end of 2005, up 16.1% year on year.
  • *Outstanding loans to personal houses*: 1.84 trillion yuan, up 15.8% year on year.

Sources:

  • National Bureau of Statistics
  • Ministry of Land and Resources
  • People's Bank of China (PBC)
  • Asia Pulse