Home 禄 Business 禄 Biz Commentary
China's housing market to bottom out gradually
By Zhu Haibin |
July 26, 2012, Thursday
|
Print Edition
Print Edition
THE National Bureau of Statistics released its 70-city house price index for June on July 18. Compared to the previous month, new home prices declined in 21 cities, were flat in 24 cities, and increased in 25 cities.
This was the first time since October 2011 that the number of cities that observed month-on-month house price increases surpassed the number of cities that observed month-on-month house price declines.
House price increases were reported in many Tier-1 cities (including Beijing, Shanghai, and Guangzhou), topped by Hangzhou (with a 0.6 percent month-on-month increase).
Compared to one year ago, house prices declined in 57 cities (vs. 55 in May). Wenzhou and Hangzhou continued to register the largest house price declines, falling 14.9 percent and 9.5 percent year on year, respectively. House prices increased (in year-on-year terms) in 11 cities (vs. 15 in May), mainly consisting of Tier-3 cities in inland China. Maximum city-level house price inflation eased to 1.2 percent year on year in June from 1.4 percent year on year in May.
The result is consistent with messages from other data sources. According to the data from Soufun, a private real estate statistics provider, national house prices increased by 0.05 percent month on month in June. This was the first monthly increase at the national level since September 2011.
Among the 100 cities included in Soufun's survey, 55 cities registered house price declines (month-on-month) in June, compared to 73 cities in May.
The sign of stabilization in house prices was accompanied by a recovery in transaction volumes.
Home sales by area fell 4.6 percent year on year in June, compared to a decline of 9 percent year on year in May. Meanwhile, home sales by value increased 6.4 percent year on year in June, compared with a drop of 1.4 percent year on year in May.
Our equity analysts reported that sales volume in eight primary cities increased by more than 60 percent year on year in the first two weeks of July, 12 percent above the long-term (2008-10) average.
The housing market seems to have benefited from the recent easing in macroeconomic policy.
The two interest rate cuts in June and July and stable liquidity in the financial market have had an indirect but positive impact on the housing market, especially on market expectations.
Genuine-end demand
Supportive measures for genuine-end demand, especially first homebuyers and buyers of small apartments, also played a role. According to the statistics bureau, new home prices for small apartments (less than 90 square meters) increased by more (or declined by less) than for large apartments (more than 144 square meters) in 31 cities, and the opposite in 22 cities.
Overall, we expect the housing market to gradually bottom in the second half. Recent recovery in transaction volumes is helping to mitigate inventory pressure in the market. However, as new supply will continue to come into the market, there is still moderate excess supply.
Hence, an abrupt turnaround in the housing market is unlikely. We maintain our view that house prices at the national level will continue to soften moderately in the coming months.
While the signs of recovery are more obvious in Tier-1 cities, prices in smaller cities will likely continue to fall in the near term.
On the policy front, we expect the government to maintain property market tightening for the rest of the year, especially to prevent bounce-back in house prices and to continue restrictions on speculative demand in the housing market.
Fine-tuning of property tightening measures, such as the support for genuine-end demand, will continue in an attempt to reduce the downside risk. However, with economic growth now becoming a priority policy objective, local government has the incentive to introduce various easing measures by circumventing the central government's policy.
The article was based on a research note issued by JPMorgan Chase on July 21.
This was the first time since October 2011 that the number of cities that observed month-on-month house price increases surpassed the number of cities that observed month-on-month house price declines.
House price increases were reported in many Tier-1 cities (including Beijing, Shanghai, and Guangzhou), topped by Hangzhou (with a 0.6 percent month-on-month increase).
Compared to one year ago, house prices declined in 57 cities (vs. 55 in May). Wenzhou and Hangzhou continued to register the largest house price declines, falling 14.9 percent and 9.5 percent year on year, respectively. House prices increased (in year-on-year terms) in 11 cities (vs. 15 in May), mainly consisting of Tier-3 cities in inland China. Maximum city-level house price inflation eased to 1.2 percent year on year in June from 1.4 percent year on year in May.
The result is consistent with messages from other data sources. According to the data from Soufun, a private real estate statistics provider, national house prices increased by 0.05 percent month on month in June. This was the first monthly increase at the national level since September 2011.
Among the 100 cities included in Soufun's survey, 55 cities registered house price declines (month-on-month) in June, compared to 73 cities in May.
The sign of stabilization in house prices was accompanied by a recovery in transaction volumes.
Home sales by area fell 4.6 percent year on year in June, compared to a decline of 9 percent year on year in May. Meanwhile, home sales by value increased 6.4 percent year on year in June, compared with a drop of 1.4 percent year on year in May.
Our equity analysts reported that sales volume in eight primary cities increased by more than 60 percent year on year in the first two weeks of July, 12 percent above the long-term (2008-10) average.
The housing market seems to have benefited from the recent easing in macroeconomic policy.
The two interest rate cuts in June and July and stable liquidity in the financial market have had an indirect but positive impact on the housing market, especially on market expectations.
Genuine-end demand
Supportive measures for genuine-end demand, especially first homebuyers and buyers of small apartments, also played a role. According to the statistics bureau, new home prices for small apartments (less than 90 square meters) increased by more (or declined by less) than for large apartments (more than 144 square meters) in 31 cities, and the opposite in 22 cities.
Overall, we expect the housing market to gradually bottom in the second half. Recent recovery in transaction volumes is helping to mitigate inventory pressure in the market. However, as new supply will continue to come into the market, there is still moderate excess supply.
Hence, an abrupt turnaround in the housing market is unlikely. We maintain our view that house prices at the national level will continue to soften moderately in the coming months.
While the signs of recovery are more obvious in Tier-1 cities, prices in smaller cities will likely continue to fall in the near term.
On the policy front, we expect the government to maintain property market tightening for the rest of the year, especially to prevent bounce-back in house prices and to continue restrictions on speculative demand in the housing market.
Fine-tuning of property tightening measures, such as the support for genuine-end demand, will continue in an attempt to reduce the downside risk. However, with economic growth now becoming a priority policy objective, local government has the incentive to introduce various easing measures by circumventing the central government's policy.
The article was based on a research note issued by JPMorgan Chase on July 21.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 娌狪CP璇侊細娌狪CP澶05050403鍙-1
- |
- 浜掕仈缃戞柊闂讳俊鎭湇鍔¤鍙瘉锛31120180004
- |
- 缃戠粶瑙嗗惉璁稿彲璇侊細0909346
- |
- 骞挎挱鐢佃鑺傜洰鍒朵綔璁稿彲璇侊細娌瓧绗354鍙
- |
- 澧炲肩數淇′笟鍔＄粡钀ヨ鍙瘉锛氭勃B2-20120012
Copyright 漏 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
