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Contributions to year-ended investment growth
-20
-15
-10
-5
0
5
10
15
-5
0
5
10
15
20
25
30
Sep-05 Sep-07 Sep-09 Sep-11
pptppt
Hard infrastructure (lhs)Real estate (rhs)Heavy industry (rhs)
Sources: CEIC,Westpac Economics
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Contributions to Chinas investment growth
-6
-3
0
3
6
9
12
15
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
ppt
InfrastructureReal estate
Sources: CEIC,Westpac Economics
Contribution to year-ended growth rate
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Investment shares by category
Hardinfrastructure
Heavyindustry
Lightindustry
Real estate
Softinfrastructure
Extraction
Other
Sources: CEIC, Westpac.
Total nominal urban fixed investment Construction subset
Residential
Non-residential
Transport
Utilities
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70 city house prices: NEW m/m change
-100-80-60
-40-20
020
406080
100
0
10
20
30
40
50
60
70
Feb-11 Aug-11 Feb-12 Aug-12 Feb-13
Net % of cities No. of citiesNumber increasing (rhs)Number declining (rhs)Net % Rising (lhs)
Sources: CEIC,Westpac Economics
6
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70 city house prices: secondary m/m change
-80
-60
-40
-20
0
20
40
60
80
100
0
10
20
30
40
50
60
70
Feb-11 Aug-11 Feb-12 Aug-12 Feb-13
Net % of cities No. of citiesNumber increasing (rhs)Number declining (rhs)Net % Rising (lhs)
Sources: CEIC,Westpac Economics
7
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70 city house prices: net balance m/m change
-80
-60
-40
-20
0
20
40
60
80
100
-80
-60
-40
-20
0
20
40
60
80
100
Feb-11 Aug-11 Feb-12 Aug-12 Feb-13
Net % of cities Net % of citiesNew
Secondary market
Sources: CEIC,Westpac Economics
8
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Chinese land prices
-10
-5
0
5
10
15
20
25
-10
-5
0
5
10
15
20
25
Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
%yr %yr TotalCommercialIndustrialResidential
Sources: CEIC, Westpac Economics.Land prices are a spliced series for 70cities up to Dec-10 and 105 cities since.
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Chinese land prices: total & residential
-10
-5
0
5
10
15
20
25
-10
-5
0
5
10
15
20
25
Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12
% 6mthannualised% 6mthannualised
Total
Residential
Sources: CEIC, Westpac Economics.Land prices are a spliced series for 70cities up to Dec-10 and 105 cities since.
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Chinese real investment & land prices
-14
-7
0
7
14
21
0
10
20
30
40
50
Mar-05 Mar-07 Mar-09 Mar-11 Mar-13
%yr %yr
Construction
EquipmentTotalCommercial land prices
Sources: CEIC, Westpac Economics.Land prices are a spliced series for 70cities up to Dec-10 and 105 cities since.
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Housing and auto sales
-50
-25
0
25
5075
100
125
150
-50
-25
0
25
5075
100
125
150
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr
Auto sales
Housing sales
Sources: CEIC, Westpac Economics.
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House sales: national volume, regional values
-50-250
255075100
125150175200
-50-25
0
255075
100
125150175200
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr Centre (value)
East (value)
West (value)
National volume smoothed
Sources: CEIC, Westpac Economics.
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Commercial & off market urban housing
-20
0
20
40
60
-20
0
20
40
60
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%ytd%ytdMarket residential (42%)
Non-market residential (8%)
Sources: CEIC, Westpac Economics. End 2011shares of total urban construction in parentheses.
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Non-residential urban construction
-20
0
20
40
60
-20
0
20
40
60
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%ytd%ytdMarket non-res. (14%)
Non-market non-res. (36%)
Sources: CEIC, Westpac Economics. End 2011shares of total urban construction in parentheses..
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Commercial & off market urban construction
-20
0
20
40
60
-20
0
20
40
60
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%ytd%ytd Market res. (42%)Market non-res. (14%)
Non-market res. (8%)
Non-market non-res. (36%)
Sources: CEIC, Westpac Economics. End 2011 shares in parentheses.
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Commercial & off market construction
-10
0
10
20
30
40
50
-10
0
10
20
30
40
50
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%ytd%ytdCommercial developersOff market
Sources: CEIC, Westpac Economics. Off-market construction is about 38% of total, and is mostly non-residential.Government departments, quasi-government agencies and state owned companies are the main investors. Now as in09, the off-market sector is playing a key role in supporting overall construction growth.
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Commercial & off market housing construction
-10
0
10
20
30
40
50
-10
0
10
20
30
40
50
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%ytd%ytdCommercial developersOff market
Sources: CEIC, Westpac Economics. Off-market housing construction is about13% of total housing. Residential thus comprises 20% of the off-market total.
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Commercial & off market housing construction
-60-45-30
-1501530
45607590
-60-45-30
-150
1530
45607590
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr Commercial developersOff market
Sources: CEIC, Westpac Economics. Off-market housing construction is about13% of total housing. Residential thus comprises 20% of the off-market total.Data is 3mma of yoy % growth.
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Land purchased: national & by region
-60
-40
-20
0
2040
60
80
100
-60
-40
-20
0
2040
60
80
100
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
%yr %yr
Central East
West National
Sources: CEIC, Westpac Economics.
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Real estate: key demand & supply parameters
50
100
150
200
250
300
50
100
150
200
250
300
Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13
indexindex
CompletionsSalesStarts
Sources: CEIC, Westpac. Aug-2006 = 100.Underlying data in sqm.
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Housing starts and real estate investment
-15
0
15
30
45
60
75
-15
0
15
30
45
60
75
Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr Starts 3mths prior
Real estate FAI
Sources: CEIC, Westpac.Underlying data in sqm.12 month average of raw oya growth rate.
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Sales volumes lead starts by 6 months
-30
-15
0
15
30
45
60
75
-30
-15
0
15
30
45
60
75
Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr Sales 6mths prior
Starts
Sources: CEIC, Westpac.Underlying data in sqm.12 month average of raw oya growth rate.
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Residential sales & starts: volumes
-45
-30
-15
0
15
30
45
60
7590
-45
-30
-15
0
15
30
45
60
7590
Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
%yr %yr Sales
Starts
Sources: CEIC, Westpac.Underlying data in sqm.Raw oya growth rate.
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Starts lead completions by 1 to 2 years
-30
-15
0
15
30
45
60
75
-30
-15
0
15
30
45
60
75
Aug-99 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Aug-13
%yr %yr
Starts 20mths prior
Completions
Sources: CEIC, Westpac.Underlying data in sqm.12 month average of raw oya growth rate.
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Housing completions and sales: volume
-30
-15
0
15
30
45
60
75
-30
-15
0
15
30
45
60
75
Aug-99 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Aug-13
%yr %yr Sales
Completions
Sources: CEIC, Westpac.Underlying data in sqm.12 month average of raw oya growth rate.
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Real estate loans outstanding
0
5
10
15
20
0
5
10
15
20
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13
%GDP %GDP
Trusts to real estateBanks to DevelopersMortgages
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Property developer finance by source
15
20
25
30
35
40
45
15
20
25
30
35
40
45
Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
%% "Self raised"Down payments and sales revenue
Loans
Sources: CEIC,Westpac Economics.
Consistent tighteningof monetary policy
Consistent tighteningof monetary policy
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Property developer finance: growth by type
-50
-25
0
25
50
75
100
125
-50
-25
0
25
50
75
100
125
Dec-04 Dec-06 Dec-08 Dec-10 Dec-12
%yr %yr "Self raised"
Loans
Down payments and sales revenue
Total
Sources: CEIC,Westpac Economics.
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The key messages reiteratedOverall growth in fixed real estate investment looks to be levelling off in the 20-21%ytdarea, versus the lows in the 15-16% region in 2012Q3.
The heat is coming out of housing prices in response to tightening measures earlier in theyear, with the slowdown more pronounced in the secondary market rather than in newdwellings. Land prices are grinding higher, with residential land the best performedcategory. By region, housing sales are slowing most rapidly in the East, where therebound was most pronounced.
New housing starts continue to undershoot the lead implied by the rebound in sales,despite developers balance sheets looking much better than a year ago. The effort toclear inventories has obviously taken most of their energy. Repressed turnover in theland market supports this interpretation.
Credit demand from households has been sound, although survey data suggests housepurchase plans have diminished.
Commercial non-residential construction has settled into a 20% groove, while off-marketconstruction is slowing sharply in both res. and non-res. SOE investment has slowedsharply since late 2012.