China Home Prices Hold In October
In something of a surprise, China’s housing boom remains alive - at a slower pace - but it hasn’t died as many ‘experts’ have been forecasting.
Yes, the pace of investment again eased in October slowed and yes, the rise in house prices has also slowed, or fallen in some major cities - but the level of activity remains resilient even though the government continues to try and cool activity.
Taken with last week’s retail sales, investment, production, trade and inflation data, the Chinese economy survived October in reasonable shape - although debt continues to be the biggest fear - especially at the local government level where there are reports billions of dollars of projects have been cancelled in recent weeks.
Those cancellations and moves to cut the level of debt issuance by local governments could have a negative impact on the economy in coming months, on top of the production cuts in steel, cement and other polluting industries.
But the majority of the 70 cities surveyed by the National Bureau of Statistics (NBS) still reported a monthly price increase for new homes. Fifty cities reported higher prices in October, up from 44 in September.
In fact China’s new home prices rose at a slightly faster pace in October after gains had held steady the previous month, as prices remained resilient in the face of falling sales and a tighter liquidity environment.
Reuters reported on Saturday that data showed average new home prices rose 0.3% month-on-month in October, compared with September’s 0.2% rise.
And the number of cities surveyed that recorded monthly increases in prices rose last month, indicating broadening strength in markets nationwide.
New home prices were up 5.4% year-on-year in October, down from September’s 6.3% as the impact of government/regulatory efforts to produce a soft landing in the housing market.
While monthly price rises peaked in September 2016 at 2.1%, there has only been a slow softening of the growth rate in the past year.
Prices for new private homes in top-tier cities fell 0.1% in October, down from the 0.2% drop in September, the NBS said in a note accompanying the data.
Reuters reported that in the southern of Shenzhen, which borders Hong Kong, prices fell 0.1% after being flat in September. They were down 3.3% from a year earlier.
But in Shanghai prices were up 0.2% month on month after failing to move in September.
Property values rose 0.2 percent on-month in Shanghai after remaining unchanged in September.
The NBS said that property prices in tier-3 cities rose 0.3% from a 0.2% increase in September.
Analysts wonder if there is a bigger price shock coming after data on Monday showed loans to household, mostly for property purchases, fell to 450.1 billion yuan in October from 734.9 billion yuan in September.
And in the urban investment data for October, released on Tuesday property sales in October fell at the fastest rate in more than 2.5 years and housing starts slowed sharply,
Property investment grew 5.6% in October from a year earlier, from 9.2% in September, according to Reuters' calculations based on data from the National Bureau of Statistics.
Investment in the first 10 months of the year rose 7.8% from a year earlier, compared with 8.1% in the first three quarters of the year.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.