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The property sector accounts for some 15 percent
of China's economic output, with weak property sales
highlighting the risks faced even to achieve the government's
reduced 7 percent growth target.
"GDP growth of 7 percent means investment activities will drop,"
Soho China <0410.HK> Chief Executive Officer Zhang Xin told a
conference last week. "This year will be tougher than 2014."
Property investment growth slipped to 10.4 percent in the
Jan-Feb period, from 10.5 percent for full-year 2014, the
National Bureau of Statistics said on Wednesday.
Chinese home prices fell again in February from January but the
pace of declines slowed in a sign that the market may be
starting to bottom out, two private surveys showed as Beijing
steps up stimulus to support the faltering economy.
Shanghai-based developer CIFI Holdings <0884.HK> took a positive
view on Tuesday, saying it sees a better second half this year,
and plans to raise prices by 10 to 15 percent.
Still, the real estate downturn remains a key risk for China,
with weakness expected to persist through at least the first
half of the year, crimping demand in 40 related economic sectors
ranging from steel to cement to furniture.
Newly-started property construction recorded the biggest decline
since May, down 17.7 percent compared to an annual drop of 10.7
percent last year, showing developers have slowed their rate of
expansion, given the gloomy outlook.
China's central bank cut interest rates in late February, for
the second time in three months, as Beijing grapples to sustain
an economy weighed down by the cooling property market, high
debt levels and excess factory capacity.
The rate cut should boost property sales and help stabilize
house prices, but a strong recovery in the sector is unlikely
soon, market watchers said.
"There's still an excess supply in the market; it'll take at
least a year to correct," said Nomura chief China economist Zhao
Yang.
(Editing by Eric Meijer)
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