Property Market Chartbook, June 2021

May property sector indicators highlighted the deteriorating policy environment facing the industry, with the potential for additional tightening measures to come. Land sales and new starts continued weakening, while ongoing sales momentum in major cities did not motivate new construction activity.

Posted July 6, 2021
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“Three Red Lines” Restrain Major Developers

Chinese property developers’ 2020 annual results showed that the “three red lines” meaningfully impacted their financial conditions, a trend that is continuing this year. Developers used accounting tricks to improve the financial ratios monitored by regulators, especially cash positions relative to short-term debt. However, the credit environment remains restrictive, and this has forced developers to slow construction, cut back on land purchases, and preserve cash to manage rising debts. All of these factors should contribute to slowing cyclical activity in the second half of 2021.

Posted June 27, 2021
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May 2021 China Macro Data Recap

May output indicators were generally below market expectations, with a notable slowdown in construction activity data and cement output.  The global chip shortage is impacting China‘s auto output and sales activity, and virus-related restrictions in Guangdong appear to have influenced export shipments  in May.  Property sector indicators bear careful scrutiny as tightening measures targeting the sector intensify, while  the slowdown in credit growth may moderate in the coming months.

Posted June 27, 2021
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