Monitor | Both good and bad news in China's property rebound
While the recovery in real-estate investment will benefit the world at large, it may only serve to stave off the market slump for the time being
Last week China Vanke, the country's biggest residential property developer, announced that home sales last month leapt an impressive 140 per cent compared with December 2011.
As a result, its overall sales for last year amounted to 140 billion yuan (HK$172.88 billion), up 16 per cent from the year before. This surge in activity follows the news that home prices rose in the majority of big cities in November (see the first chart).
This rebound has triggered a revival in construction that saw residential property investment jump 22 per cent in November from a year earlier, up from a growth rate of just 5 per cent in July (see the second chart).
To the vast majority of watchers, this rebound in property investment is unambiguously positive.
Investment in real estate makes up a quarter of all the mainland's investment in fixed assets. So with fixed-asset investment contributing almost half of the country's gross domestic product, property investment accounts for more than 10 per cent of the total economy.
That means any pick-up or slowdown in real-estate investment has a big effect, not just on Chinese growth rates, but on the health of the broader global economy.