It's been the slowest property investment growth for China in 2015 at 1 per cent despite the improved national sales, and as oversupply make developers slowdown in construction, the pace will likely turn negative this 2016, Reuters reports.
On Tuesday, National Bureau of Statistics (NBS) revealed that last month was China's real estate investment's slowest growth since February 2009 - a major economic driver affecting 40 other sectors from cement to furniture. Growth rate in 2015 saw an annual rise of 1.3 per cent for the first 11 months compared to 2014's 10.5 per cent.
Real growth inflation adjustment grew 2.8 per cent from 2014's 9.9. per cent due to easing construction material prices.
With the inventory still bloated from unsold homes, new housing starts dropped 14 per cent but the inventory floor area improved 15.6 per cent than a year earlier, but dropped from November's 16.5.
"New starts' decline may accelerate to 20 percent this year, which means property investment will be worse than last year. It is likely to turn into a drop," said Gavekal Dragonomics economist Rosealea Yao in Beijing.
The world's second largest economy will continue to see slow property investments despite warming home prices.
"Inventory increase is slowing, but the slowdown is caused by lower new starts, which doesn't mean demand is growing stronger. With the demand not so strong, the way to maintain a low inventory level is to build even less," CLSA analyst Nicole Wong said.
In December, property sales hit its 1.3 billion square meters mark, a 17.6 per cent jump higher from November and 6.5 per cent a year earlier.
Last year, support measures were rolled out by the government and the housing market bottomed, but 60 per cent of national sales which is composed of third- and fourth-tier market inventories remained high.
Las month, the government vowed tackling property inventories as well as providing support for migrant workers who wish to purchase a home in cities.
"The balance between demand and supply in the cities we're in has improved a lot...so we don't need to push for destocking in these cities," said an official of state-backed China Resources Land (1109.HK), with 74 percent of its projects in major cities.
"But we're not talking about the third-tier cities here. We are offering promotions in the smaller cities to push sales," the official said.
In research report, Yi Wang of Goldman Sachs pointed to the government saying that it should exert more efforts to promote destocking.
"(Government should also) manage the supply carefully by supporting industry consolidation, rather than encouraging the premature resumption of property investment growth."
