Chinese house prices stall

Yesterday, the National Bureau of Statistics published the latest set of widely followed but wildly unreliable home prices indices for the 70 cities.

For newly constructed homes, prices fell in 14 cities on a month-on-month basis (vs. 12 cities in June), while 17 cities recorded flat prices )vs. 14 cities in June).    On a year-on-year basis, however, there is only 1 city where prices fell (vs. 3 in June), while prices increases slowed in 26 cities.

For the secondary market, prices fell in 22 cities compared to the previous months (vs. 22 cities in June), and prices in 12 cities were flat (vs. 12 in June).  On an year-on-year basis, prices fell in 4 cities (vs. 5 in June), and prices increases in 28 cities have slowed.

The latest data shows that the property prices are still stubbornly high even though prices growth has been moderating, and transaction volume has stayed low, probably across the country.  That reflects the impact of rounds and rounds of price curbs, and more importantly, monetary tightening.  This data, together with the inflation numbers, suggest that there is absolutely no reason why monetary tightening should end.  So far, we have seen low transaction volume as well as some selling pressure in a few cities, like Wenzhou.  As long as the stance of monetary tightening continues, more meaningful corrections will be seen. It’s just as a matter time.

New homes

Existing homes

Comments

  1. I think it will be very fast when the Chinese bubble pops as there is a lot of dodgy debt there. What I would like to know is weather this will increase or decrease the pressure on the Aus housing market. I.e. weather the money will flow from China to here or whether the investors will decide to get out of real estate speculation entierly and also sell their Australian properties.

  2. I posted a question about this on a similar article, a number of days ago.

    The lack of data in this area is very concerning.

    Even modelling on worst case scenario of Mainland Chinese leaving the Australia residential investor market is not available.