China’s property sector has been surprisingly resilient so far in 2017, despite administrative purchase restrictions and a sharp slowdown in credit growth. A notable downturn in secondary market housing prices in the last six months, particularly in second-tier cities, implies weaker investment-driven housing purchases ahead. Strong nationwide sales have been boosted by temporary factors such as shantytown redevelopment in third-tier and smaller cities. Slowing real estate investment and construction activity are expected to weigh on the economy in the second half of the year, and may surprise to the downside if credit growth decelerates further.
