China: Housing gaining momentum - Westpac

Elliot Clarke, Research Analyst at Westpac, notes that in April, 58 of 70 Chinese cities reported rising prices, the broadest gain since June 2017 and the established home market was even more robust, with gains seen in 69 of 70 cities.

Key Quotes

“Regarding the scale of the gains, there is a very clear divide between tier 1 and the less-developed cities of tier 2 and 3. In tier 1, new and existing prices are now 1% lower than a year ago. In contrast, tier 2 and 3 continue to see robust gains, with prices up 6%yr for new houses in both tiers and for existing homes in tier 2. Existing home price growth in tier 3 is a little softer at 4%yr.”

“Some interesting developments have also been seen in the activity data of late.”

“Fixed asset investment in the sector has shown improving momentum over the past few years; however, relative to history, these gains are still modest.”

“The distribution of construction activity shown in the partial data is also quite significant.”

“Authorities have made clear that they wish new supply to be built where it is most needed. For the most part, this is occurring, with growth in new construction similar across the three tiers.”

“In aggregate, the pipeline for activity remains robust – as evinced by land price growth.”