BEIJING (Reuters) – China’s new home prices fell significantly in December for a fourth straight month even as year-end sales volumes surged, a sombre omen for fourth-quarter 2014 economic growth data due out later in the week.
Sunday’s gloomy National Bureau of Statistics’ data foreshadowed weak economic figures set for Tuesday, with expansion expected to slow to 7.2 per cent, the weakest since the depths of the global financial crisis.
Falling property prices are likely to keep pressure on policymakers to head off a sharper slowdown this year.
The expected slowdown in growth of the world’s second-largest economy, from 7.3 per cent in the July-September quarter, means the full-year figure would undershoot the government’s 7.5 per cent target and mark the weakest expansion in 24 years.
If the GDP data proves worse than expected, some analysts say the People’s Bank of China (PBOC) could cut interest rates further or lower reserve requirement ratios (RRR) for all banks.
A reserve ratio cut would give banks greater capacity to lend, but many market watchers question if they would be willing to increase their exposure as economic conditions deteriorate.
With real-estate investment accounting for about 15 per cent of China’s GDP growth, a 9 per cent decline in new floor space under construction in the first 11 months of 2014 could take a heavy toll.
“We expect China’s GDP growth to slow further in 2015 to 6.8 per cent, as the ongoing property downturn leads to further weakness in construction and industrial production, and related investment,” Tao Wang, China economist at UBS, wrote in a note.