Slow recovery the new trend

Mild policy support and slow recovery will become the new normal of the mainland's real estate market, with property investment - a key driver of the broader economy - probably trending down until the second half of next year, economists said.

That will be different from the swift turnaround of the market in 2009 and 2012 under ample and cheap liquidity.

The current correction started early this year due to oversupply and tight credit.

After the central bank relaxed mortgage policies at the end of last month, property sales have been picking up strongly in some cities such as Shanghai and Nanjing, stoking expectations of a quick rebound.

"It's unlikely," said Zhu Haibin, the chief China economist of JP Morgan, adding that property investment growth would slow to 11 per cent to 12 per cent this year and 5 per cent to 6 per cent next year, from last year's 20 per cent. It grew 12.5 per cent in the first three quarters.

Zhu said that as part of its targeted monetary easing, the People's Bank of China might pump cheap money into a select number of commercial banks for them to lend to first home buyers and upgraders if the measures announced so far failed to blunt the downturn.

Policymakers have so far kept interest rates and banks' required reserve ratios on hold, despite strong expectations after annual growth in the world's No 2 economy slowed to its lowest pace in more than five years in the third quarter at 7.3 per cent.