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.