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The Property Sector and China’s 2020 Cyclical Outlook

Property construction has become the key variable for China’s cyclical outlook next year. So far this year, sales revenues have cushioned the sector (and to a certain extent, the entire economy) against the current slowdown in credit growth. Sales and construction will likely hold up through year-end and early in 2020, but later next year, developers will struggle to build units at the same pace given growing liabilities, dwindling land reserves, and falling prices. The expiration of the shantytown redevelopment program is another major headwind. Property activity will inevitably slow, dragging on overall cyclical momentum. The rate at which speculative demand for housing slows, as well as changes in the regulatory stance will determine the extent to which property and China’s macroeconomy slow in 2020.

Posted December 12, 2019
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