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Chart of the Week: Completed investment in China’s real estate

Macro 4 minutes to read
Christopher Dembik

Summary:  The Chinese government's attempts to re-engineer the economy involves both a massive stimulus programme and looser credit conditions, which, in turn, are making a significant impact on the housing market.

As part of China's massive stimulus programme and due to looser credit conditions, the targeted housing policy in the country continues to have a positive impact on the real estate sector. Completed investment in real estate, which is a key driver of growth, surged in the two first months of 2019 and reached 11.6% YTD Y/Y in February, which is the highest level since November 2014. 

Other more recent data confirm the positive momentum: the prices of new homes rose by 10.6% YoY in March across 70 cities monitored by the government, and property sales by floor area, which are considered a reliable indicator of demand, grew by 1.8% YoY over the same period. As was the case in previous economic downturns, China is focusing strongly on the real estate sector since it represents roughly 80% of Chinese people’s wealth. As such, it is a key pillar of the country’s economic stability that cannot cope with a marked slowdown.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.

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