AFTER years of talking up China’s gravity-defying property markets, local land kings are now singing a darker tune. On May 26th Yu Liang, the president of Vanke, China’s biggest developer, declared that the “golden era” in which “everybody makes money out of property is gone.” That came on the heels of comments by Pan Shiyi, the boss of Soho China, another property firm, likening the country’s real-estate sector to the Titanic: “It will soon hit an iceberg.”Official data show the country’s property market is indeed coming down to earth. During the first four months of this year, the value of residential sales fell by nearly 10% versus a year ago, and construction activity on new homes fell by a quarter. The decline on a month-to-month basis is even more striking (see chart).Why is the market losing steam? One explanation is that there is too much building going on. Until recently this argument was dismissed by property bulls, who pointed to wave upon wave of rural migrants moving to cities and soaking up supply. Gavekal Dragonomics, a consultancy, estimates that China has been at or near its sustainable level of “peak supply” of housing for many...
from The Economist: Finance and economics http://ift.tt/1nZThAt
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