140224 apac, china housing prices, brian jacksonDocument 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.
House Prices in China Softens, Signaling Rock Quarter Ahead
24 February 2014
China’s Housing Prices
Brian Jackson, China Economist
IHS Global Insight
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
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
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