Developers' survey reveals silver lining

To bridge the gaps in data availability, we (Standard Chartered) conducted our semiannual proprietary survey of China's property market in January-February, focusing on unlisted developers in lower-tier cities and polling senior managers at property developers in six second-and third-tier cities.

Our diffusion index based on our survey strengthened to 57.3, from a stagnant reading of 50.8 in our previous survey in July 2015. This suggests an improvement in housing-market sentiment and a potential property market recovery in the near future. The sales and policy outlook improved significantly, followed by construction and financing activities.

The recovery in sales has boosted developers' expansionary appetite and eased their financing burden. But the latest survey indicates the slow pace of inventory digestion will continue to contain price gains. The survey shows developers' construction activity started picking up in the fourth quarter of 2015 and is set to accelerate in the first quarter of this year. The total floor space of projects under construction rose 11 percent from July 2015 levels, of which floor space of newly started projects increased 29.6 percent.