China has one of the biggest, if not the biggest, real estate markets in the world. It has reeled from the effects of a market that's become increasingly lukewarm in the past few months, according to Business Times. At the risk of cooling down even further next year, the government has started to ease up on a few of the rules that were set in place for the protection of market buyers.
The ones most at risk of the cooldown are smaller cities, the ones who've seen the most price gains this year. It is the unwanted-although expected-effect of a slump that's a direct result of economic activity slowing down. It's no help that financing conditions remain the same as during the time of the 'better' market.
The market is also predicted to have a property price hike in the values of 2 percent for the first six months of 2019. This marks an annual rise that's not as strong as the years prior and has been one of the catalysts behind China's strong economic market performance. Market analysts have since tempered their expectations since their first forecast, which had the market prices rising up to 3.3 percent during those months.
That the sector remains lively as the demand for houses has stayed largely the same belies the situation. The prices, Reuters noted, failed to emulate its peal mid-2016 levels as authorities sought to protect the public from inflated market prices. It hasn't hindered the public's interest or has had little effect.
October data has shown a growth of 8.6 percent in prices when compared with figures from a year earlier. Recent price gains have happened in the smaller cities, where the restrictions haven't been as strict as it is in the 'mega' cities.
Sun Binyi, the analyst for China Real Estate Appraisal, expected a 'downside risk' the coming year as more contractions happen in cities three or four tiers below China's big cities. These risks come from reduced spending for a slum re-development project from the government, as well as financing from property developers becoming tighter. The trade dispute between the U.S. and China isn't helping things at all, as well.
Certain factors may prevent that from happening in 2019, chief of these being a truce between Trump and Xi. However, for the time being, it looks like China's growth could slow down to the tune of 6 percent in 2019.
