China’s property correction rolls on

Goldman with the note:

Bottom line:

The National Bureau of Statistics’ 70-city housing price data suggests the average property price in the primary market edged down further from a month ago in November after seasonal adjustments. Housing prices in tier 1 and tier 2 cities rose at a slower pace while prices in lower tier cities fell further. Fewer cities saw higher property prices in primary and secondary markets in November.

Key numbers:

NBS’ 70-city primary market average property price change in November: -1.0% mom annualized (seasonally adjusted by GS), +3.1% yoy. October: -1.0% mom annualized, +3.4% yoy.

Main points:

  1. Average housing prices in the primary market edged down further by 1% mom annualized in November. Property prices in tier 1 cities rose 3.3% mom annualized in November after seasonal adjustments, moderating from 4.2% in October. Price appreciation in tier 2 cities slowed to 0.5% mom annualized in November (vs. 1.5% in October). Property prices in tier 3 cities fell further by2.5% mom annualized in November following a decline of 2.9% in October and prices in tier 4 cities dropped 4.9% mom annualized in November (vs. -6.8% in October). Fewer cities saw higher property prices in primary and secondary markets in November (Exhibit 2).
  2. Major cities’ inventory months(sellable gross floor area divided by 12 month rolling gross floor area sold) edged up to 12.0 in November from 11.6 in October. The year-on-year decline in property sales and new starts both narrowed in November based on NBS data. Property completions accelerated meaningfully, reversing from a sharp contraction in October.
  3. Mortgage extension gained pace slightly in November as suggested by the sequential acceleration in household mid-to-long term loans. While the statement from this year’s Central Economic Working Conference appears to be more pro-growth, we expect the chance of a reversal of property regulations to be low as “housing is for living not for speculation” remained in the statement as the general housing policy guideline.
Unconventional Economist

Comments are hidden for Membership Subscribers only.