China’s real estate developers benefitted from a number of factors that made 2013 a banner year for housing sales, and helped drive double-digit growth in housing prices in most of the country’s major cities.
However, most analysts are now predicting more subdued conditions for 2014, including Bank of America, which recently published its prediction for the new year. According to a press report yesterday,
“The previous government led by the former Premier Wen Jiabao rushed out tightening measures right before it left office in March 2013, but the new government decided not to implement those measures, partially contributing to the release of pent-up demand,” economists led by Ting Lu at Bank of America Merrill Lynch said in a note.
Bank of America Merrill Lynch expects national average new home prices to have risen 9.5 percent in 2013. For 2014, however, the pace will moderate to just 5.0 percent. This is mainly due to a natural tapering of pent-up demand and increased new home supply as a result of rising land sales and improved cash position of developers.
A report last month from investment bank BNP Paribas projected that China’s real estate developers will struggle to maintain growth over the next few years as many of them run out of available stock to sell and competition for new sites erodes margins and limits opportunities for expansion according to a recent report from a major investment bank.