Goldman with the note. It appears the trend is still constructive if lumpy.
1. After seasonal adjustments, weighted average house prices in the primary market edged down by 0.1% mom annualized in May (vs. +2.7% in April; Exhibit 1), amid the backdrop of weakening property sales. The proportion of cities that experienced sequential house price gains declined in both the primary market and the secondary market in May from April. (Exhibit 2). Year-on-year change in weighted average new home prices edged up to 0.2% in May from 0.0% in April.
2. By city tiers, house prices of Tier-1 and Tier-2 cities rose sequentially by 0.3% and 0.5% mom annualized in May (vs. +3.3% and +3.5% in April), respectively. For low-tier cities, house prices increased sequentially by 0.8% mom annualized in Tier-4 (vs. +2.2% in April), while house prices declined sequentially by 0.5% in Tier-3 cities (vs. +2.2% in April). Despite more local housing easing measures in recent months, we believe the property markets in lower-tier cities still face strong headwinds from weaker growth fundamentals than top-tier cities, including net population outflows and potential oversupply problems.
