The Evergrande Washington in Yueyang, Hunan province Photo: Fang.com

HONG KONG – China’s economy slowed further in November, dragged down by a sagging property market, slowing fixed asset investments and dampened consumer spending, new official data shows.

Slowing fixed-asset investments and declining property prices in most cities weighed against China’s economy in November, National Bureau of Statistics (NBS) data released on Wednesday indicated.

Property investments grew 6% in the first 11 months year on year, slowing from 7.2% during the January-October period, the NBS said. Growth in fixed-asset investments eased to 5.2% in January-November, from 6.1% in January-October, the data showed.

Of China’s 70 major cities, 59 saw new residential apartment prices drop last month, while 63 reported falling property prices in secondary markets, according to the NBS.

Residential property sales and the area of newly started residential housing dropped approximately 20% year on year, as did production of property-linked commodities such as cement and steel, the data showed.

Property experts said the steady decline in prices may create room for policymakers to ease various property curbs put in place earlier to prevent a market collapse, including a limit on price discounts, with some now predicting prices should stabilize in the first half of 2022.

The China Evergrande Centre in the Wan Chai district of Hong Kong on August 6, 2021. Photo: AFP / Isaac Lawrence

The downcast data highlights the impact real-estate is having on China’s broad economy, the world’s second-largest, and the policy challenges Beijing faces to maintain growth and confidence. Nowhere is that challenge more pressing than at Evergrande Group, China’s massively indebted property developer.

On December 6, Evergrande Group property developer set up a risk management committee chaired by its chairman and founder Hui Ka-yan after its bondholders were unable to receive overdue coupon payments from the property developer.

On the same day, the PBoC announced it would cut the reserve requirement ratio (RRR) for banks by 50 basis points on December 15, releasing about 1.2 trillion yuan (US$188.4 billion) of funds to the markets to support the country’s small-and-medium-sized enterprises.

Apart from the slowing growth of fixed-asset and property investments, retail sales growth eased by 3.9%, missing market forecasts of a 4.7% rise, the NBS said on Wednesday. Sales in the restaurant and catering sector dropped 2.7% as people stayed home amid virus outbreaks in many cities.

Meanwhile, industrial output rose 3.8% in November from a year earlier, beating market forecasts of 3.7% growth. The growth rate was 3.5% in October.

At the same time, the NBS said property prices in 70 major Chinese cities declined in November from October. Last month, the price of apartments in secondary markets in top-tier cities, including Beijing, Shanghai, Guangzhou and Shenzhen, fell 0.2% from October.

Property prices dropped 0.4% month-on-month last month in second-tier cities such as Hangzhou and Chongqing and declined 0.3% in third-tier cities such as Jilin and Wenzhou.

Yan Yue, a director at the Shanghai E-House Real Estate Research Institute, said the average price of new flats in 70 major Chinese cities had declined for a third straight month and at an accelerating rate.

Property prices are falling in many Chinese cities. Photo: iStock

Yan said as Chinese property markets were now “overcooled” as opposed to previously overheated, the government would likely relax some of its property curb measures to help homebuyers enter the market in early 2022.

Yan noted 59 of the 70 major Chinese cities reported falling property prices in November for the first time since March 2015. He said many property developers would continue to cut prices as much as allowed to reduce their inventories.

Zhang Dawei, the chief analyst at Centaline Property Agency Ltd, said it was rare to see as many as 59 cities reporting falling property prices. Zhang said he believed tight credit in property markets had passed and that real estate prices would stabilize in the first half of 2022.

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