The current cycle in China’s property sector is fundamentally different from those that have preceded it. The traditional correlation between sales growth and construction activity is breaking down, because of the recent surge in presold but so far undelivered housing units. In a market where peak levels of housing supply are meeting fundamentally weaker demand conditions, several trends will emerge later in 2019 and beyond: falling sales and prices compared to high 2018 levels, industry consolidation, defaults on developers’ corporate bonds, and much weaker construction activity.
