Property to remain a drag despite stronger sales

Growth in property sales returned to positive territory for the first time in over ayear last month, helped by lower mortgage rates and a loosening of purchasecontrols. But hopes that this marks the start of a broader turnaround for the realestate sector are likely to be disappointed. Developers are still dealing with thehangover from years of construction outstripping underlying demand (see Chartbelow) which has left them sitting on a glut of unsold properties. Stronger sales,if they are sustained, would help absorb some of this oversupply but doing sowill take time – although developers have moved to slow the launch of newprojects, property starts are still outpacing sales and inventory levels are stillrising making it difficult to see much upside for property construction this year.