Real estate investment growth slows down

Booming property markets, especially China’s residential market, have raised concerns of a coming bubble and prompted governmental measures to tame housing prices. In this part, we’ll analyze China’s property market growth.

How China’s Property Market Could Affect Iron Ore Prices

Real estate investments rose 10.2% YoY (year-over-year) in April, lower than the 10.8% YoY growth they registered in March. According to Reuters, in the first four months of the year, growth slowed down to 10.3% from 10.4% in the first quarter.

Slower growth in sales and construction starts

Also, real estate developers are launching fewer new projects due to weak sales growth. According to Capital Economics analysts, this is mostly because of slower lending and tighter property market controls.

In April, property market sales fell 4.1% YoY in April, marking their worst monthly performance since October 2017. In comparison, they grew 32% YoY in March. New construction starts’ floor area grew 2.9% YoY, a sharp deceleration from the 17.8% YoY growth seen in March.

Is China’s property sector cooling?

While China’s property market (TAO) is showing signs of cooling down, according to the latest data, its growth still remains quite strong. Some of the slowdown may be due to the government’s efforts to curb property market speculation. Authorities are trying to maintain a consistent housing policy, and their policy measures seem to be having an effect.

A crackdown by Chinese authorities on the property market could mean a tougher road ahead for iron ore miners. While Vale (VALE), the world’s largest iron ore producer, is based in Brazil, BHP’s (BHP) (BBL), Rio Tinto’s (RIO), and Cleveland-Cliffs’ (CLF) major seaborne operations are in Australia.

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