140224 apac, china housing prices, brian jackson
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    140224 apac, china housing prices, brian jackson 140224 apac, china housing prices, brian jackson Document Transcript

    • IHS Global Insight China Economist Brian Jackson’s latest note on “China’s Housing Prices” is given below. Brian may be reached in Beijing on Brian.Jackson@ihs.com for additional commentary or if you have questions. -0- House Prices in China Softens, Signaling Rock Quarter Ahead 24 February 2014 China’s Housing Prices Brian Jackson, China Economist IHS Global Insight Bottom Line:  In January, housing price growth decelerated across major markets in China for the first time since mid-2012, raising the likelihood of a correction in sales and construction activity in the near term.  In January year-on-year price growth across 70 major markets in China fell to 8.9%, down from 9.2% in December.  Forty-one of 70 markets saw year-on-year price growth deceleration in January, compared to 30 in December or only 3 one quarter ago.  The sharpest decelerations took place in Shenzhen, Guangzhou, Harbin, Wenzhou, Shenyang, Beijing and Urumqi, which each saw price growth slow by 2.1 to 1 percentage points. Of those, only Wenzhou saw prices decline at 4% y/y.  To date, the slowdown is not as sharp as in past corrections, likely due to a differentiated approach taken last fall, when at least 18 cities launched a variety of policies to restrict demand of second home purchases (i.e. investment purchases).  Downward momentum appears to be stabilizing, in fact; month-on-month price growth was flat in January relative to December at 0.3% m/m, following a steady deterioration in momentum from March to December. Implications & Outlook: While the new price data has surprised the market, a coming downturn was evident for the past 10 months. Following new national policies that launched in February 2013,
    • month-on-month price growth decelerated through August, when a new round of localized policies began to launch in cities with more stubborn price growth. The second round of policies announced in August further ate away at price growth in major markets. Year-on-year price growth is likely to deteriorate further at least through the first quarter, and with it, related construction activity. Loosening some local demand restricting policies could help avert a more protracted downturn in one of China’s most important growth drivers. -0-