Rising inventories could worsen overall slowdown: analysts
China is ramping up efforts to tackle the oversupply issue in the country's housing market, with cities lifting or easing home purchase restrictions to boost sales and lower inventories, media reports said Sunday.
Efforts to boost the flagging housing market are imperative as a further rise in inventories of unsold housing could weigh more on the already slowing economy, analysts said Sunday.
Nearly 90 percent of the 46 Chinese cities that had imposed home purchase restrictions - which were put in place to stabilize the housing market during its peak years - have now lifted those restrictions, domestic news portal reported Sunday.
Some local authorities - such as in Nanning, capital of South China's Guangxi Zhuang Autonomous Region, and Wuhan, capital of Central China's Hubei Province - have taken further measures to boost sales, for instance by easing their hukou, or household registration, systems, according to the report.
President Xi Jinping said during a meeting of the Central Leading Group for Financial and Economic Affairs on Wednesday that China needs to tackle property inventories and "moderately" expand demand.
The moves by local governments and the emphasis the central government has placed on property destocking reflects the importance of the sector for the national economy, said Xu Hong-cai, director of the Economic Research Department under the China Center for International Economic Exchanges. "Saving the real estate sector can save the national economy from a more significant slowdown," Xu told the Global Times on Sunday.
The real estate and auto industries were the main engines for the Chinese economy during its peak years, Xu noted, and the downturn in real estate has been one of the main factors in the slowdown in the economy in the last few years.
"The housing market certainly needs some help from the government at the moment," said Zhu Zhuohan, a Centaline Property Agency regional manager based in Guangzhou, capital of South China's Guangdong Province.
Zhu told the Global Times Sunday that while the housing market in top-tier cities is still thriving, second- and third-tier cities are facing tough situations.
