China's real estate investment slowed to 8.5% y/y in Q1, down from 10.5% in December 2014, despite a slight pickup in March. Residential and commercial real estate investment growth declined markedly to 5.9% and 18.2% in Q1, respectively, from 9.1% and 20.4% in 2014.
Despite some narrowing in the decline in property sales, property market remains the key headwind to China's economic outlook. The government has announced measures to support housing demand, including the easing of downpayment requirements for second mortgages, and more may be needed.
Structural headwinds including a combination of high inventory levels in lower-tier cities and reduced investment demand will likely continue to weigh on the sector.
"In our view, the property market correction remains the key risk over 2015-16 and presents strong headwind to the economic outlook." - says Barclays Capital
