Elliot Clarke, Research Analyst at Westpac, explains that July was a repeat of June, with Chinese authorities’ power continuing to be seen, most obviously in tier 1 as micro management of each market remains the focus, balancing out sales and price activity across the three tiers.
Key Quotes
“56 cities reported price gains in the month of July while only 9 reported price declines. For the existing market, the breadth of price growth was very similar, 54 cities seeing gains and 11 a decline. As such, across new and existing markets, price gains remain broad based.”
“The result of active micro-management of each city, tier 1 new home price growth has decelerated from 31%yr in April 2016 to 8%yr. In that time, Shenzhen, where price growth was most rapid, has seen growth decline from 63%yr to just 1%yr. Since its September peak, Shenzhen is the only tier 1 city to have experienced price declines (–3%), though Beijing and Shanghai are flat.”
“Across the outer tiers, annual price growth in tier 2 has slowed from 12%yr in November to 8%yr currently, but that is still stronger than back in April 2016, when the annual pace of growth peaked in tier 1 cities.”
“For tier 3, July was the first month since March 2015 where annual price growth deteriorated, and that was only by 0.1ppts. At over 9%yr, tier 3 is now experiencing the strongest price growth.”
“Tier 3 includes a great variety of cities, some close to tier 1 locales and others well away; hence it is important to recognise that the above growth rate is not being experienced everywhere. The range actually spans from 1%yr to 19%yr.”
“The above figures are for new housing, but the narrative is very similar for the existing market. The one stand-out difference is that, for existing homes, price growth has held up much better in tier 1 (11%yr). Arguably new housing has been the focus for authorities, so this result makes sense.”
“From the sales; starts and under construction detail, there is enough evidence to suggest that moderate growth in new construction will be seen ahead, but that we are unlikely to see an acceleration. Activity is being spread across the country, but it is evident that developers are now responding more to low inventory in tier 1 and, to a lesser extent, tier 3 by accelerating construction.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.