Little optimism about China’s property destocking prospects
Inventory in smaller cities has swollen to more than six years of sales
“Destocking” is the new buzzword in mainland China’s property sector, but people who study the industry say oversupply will not be an easy problem to solve.
The oversupply of new homes in smaller cities has become increasingly serious in the past year, attracting the attention of central government leaders.
Data from the National Bureau of Statistics showed the mainland’s unsold property amounted to a record 696 million square metres by the end of November, up from 598 million square metres a year ealier.
The authorities have included destocking in their five economic targets for 2016 after President Xi Jinping urged the reduction of property inventory at a government meeting in November to ensure the sustainable development of the property sector.
But analysts say there are a lot of challenges to be overcome.
“Home prices are already very low,” said Zhao Weijun, a Jiangsu-based managing director of property agency Centaline.
Property investment should be based on the local economic structure, not GDP