In the first half of 2019, Chinas real estate market continued its steady trend since last year, showing new features such as downward sales, stable prices and high investment growth. Recently, Bain Co. and China Merchants Bank jointly released the Private Wealth Report of China 2019, which shows that in the asset allocation of high net worth people, the proportion of investment real estate has decreased in 15-17 years and increased in 17-19 years, while in the next one to two years, the proportion of investment real estate has decreased in all kinds of asset allocation.
Source: Bain Company and China Merchants Bank Private Wealth Report of China 2019
The high net worth group is increasing the allocation of other assets and reducing the investment real estate. Rich people are reducing the allocation of real estate, and the downward sales and stable prices of the real estate market also indicate to some extent that the interest of ordinary investors in real estate investment is declining.
The compound annual growth rate of investment real estate in 2016-2018 decreased from 30% in 2014-2016 to 8%. According to the China Private Wealth Report 2019, the compound annual growth rate of RMB investable assets held by high net worth people was 12% over the same period.
The report further predicts that the growth rate of investment real estate for high net worth people will be around 7% in 2019.
According to the data from the National Laboratory of Finance and Development, the leverage rate of the residential sector was 54.3% by the end of March 2019. On May 28, the report on Chinas leverage rate released by the National Laboratory of Finance and Development (the first quarter of 2019) predicted that the upward trend of household leverage rate might ease slightly. According to the report, as real estate investment and sales continue to be affected by regulatory policies, coupled with the gradual decline of the monetization factor of shanty reform, the growth of residential mortgage loans may decline, and the increase of residential leverage rate is expected to slow down.
Source: Responsible Editor of Economic Observation Network: Wang Xiaowu_NF