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- April 1, 2016: Vol. 8, Number 4

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Peaks and valleys: Excess residential inventory is being cleared, but a large and growing gap has formed between the performances of top- and lower-tier cities

by Mard Naman

While China’s stock market volatility and slowing growth have received the lion’s share of media attention so far this year, the country’s housing sector slowly but steadily has been shedding the excess supply that has dragged it down the past couple of years. At the same time, buyer and fund-manager sentiment seems to be on the upswing.

In 2015, in the wake of the government’s supportive measures, housing sales increased as oversupply dropped from the previous year’s historic highs, and prices started to recover in many cities. That being said, oversupply is still a problem. “Destocking started in 2015, and we expect this trend to continue in 2016,” says Catherine Chen, head of research and strategy, Greater China, and national director at LaSalle Investment Management. Chen says inventory is lowest in first-tier cities, and the government is aware of that, and thus, recent policy relaxation is focused on the lower-tier cities.

“I still expect oversupp

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