According to Bloomberg, China’s slump in property sales and construction is spurring speculation that the government’s four-year-old campaign of real-estate controls will start to crack.
Citigroup sees “targeted easing” including on home purchase restrictions, while Bank of America says smaller cities may see looser rules. Centaline Group, parent of China’s biggest real-estate brokerage, says some cities are inclined to adjust policies such as the level of scrutiny of buyers.
A 25 percent plunge in new-building construction helped drag economic growth in the first three months of this year to the slowest in six quarters, adding pressure on Premier Li Keqiang to avert a deeper slowdown. Falling sales and a jump in unsold inventory stand to increase pressures on indebted local governments that rely on land sales for revenue.
“The housing sector now poses the biggest downside risk to the Chinese economy,” said Yao Wei, China economist at Societe Generale in Hong Kong. “The next batch of policy announcements is likely to be housing policy relaxation at the local government level.”
The National Bureau of Statistics said on Wednesday that growth in gross domestic product slowed to 7.4 percent in the first quarter from 7.7 percent in the previous period, compared with a 7.5 percent annual target. Industrial production in March and fixed-asset investment for the first three months of the year trailed estimates. Read More