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Property Tightening: Out of Sync

Beijing has rolled out a new round of tightening measures targeting the property sector despite building downside pressures on the economy. This is contrary to usual patterns in which the property sector is used as short-term stimulus to support growth. As property has been one of the key drivers of China’s recovery so far this year, the stronger and persistent tightening messages point to weaker cyclical activity growth starting in Q4 2019. More bond defaults, industry consolidation, falling property prices, and weaker commodity demand should be expected later in the year, as tightening steps will accelerate the property market’s confrontation with deteriorating fundamentals.

Posted August 9, 2019
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