China's new construction starts plunge as chill spreads across sector

BEIJING (Reuters) – China’s September new construction starts slumped for a sixth straight month, the longest spate of monthly declines since 2015, as cash-strapped developers reined in investment and put a pause on projects following tighter regulations on borrowing.

New construction starts in September fell 13.54% from a year earlier, according to Reuters calculations based on January-September data released by the National Bureau of Statistics on Monday.

That marks the longest downtrend since declines in March-August 2015, the last property downturn.

When the sector recovered in 2016 after authorities loosened their grip on purchases and development, tens of thousands of real estate firms borrowed heavily to build homes. But as regulations tightened again this year, many of them are facing a liquidity crunch, worsened by sharply weaker demand due to tighter restrictions on speculative purchases.

Property sales by floor area dropped 15.8% in September, down for a third month, according to Reuters calculations based on the statistics bureau’s data.

The slowdown in the sector was also underscored by a 3.5% drop in property investments by developers in September, the first monthly decline since January-February last year at the height of the COVID-19 pandemic in China.

In the first nine months, property investment rose 8.8% from a year earlier, slowing from 10.9% growth seen in January-August.

Funds raised by China’s property developers grew 11.1%, slower than the 14.8% rise seen in the first eight months.

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