2019-01-17

No Stimulus Coming


From last month via the SCMP: Guangzhou further eases housing restrictions, sets stage for more mainland China cities to loosen curbs
The mainland Chinese city of Guangzhou, one of the country’s largest, further eased housing restrictions on Monday, five days after it scrapped a ban on sales of apartments to individuals.

The city authorities said in a document that Guangzhou residents who had paid towards a housing provident fund policy could withdraw money for buying homes for living in nearby cities such as Foshan and Dongguan.
The December 70-city NBS report is out and it shows home prices rose 3 percent in Guangzhou last month, before the easing restrictions kicked in. As I wrote a few weeks ago, Chinese policymakers are trapped because increased credit growth will be like a match to gasoline in the housing market.

SCMP: Prices of China’s new homes grow at the weakest pace in eight months as purchase curbs bite hard amid a slowing economy
The prices of new homes rose by 0.77 per cent last month across 70 cities monitored by the government, according to Bloomberg’s calculation of data released by the National Bureau of Statistics. This was slower than the 0.98-per cent gain in November, and was the slowest clip since April 2018.

“The continuous slowdown in prices suggests that some developers are cutting the prices of newly launched projects to boost year-end sales,” said Yan Yuejin, research director at E-House China R&D Institute.
This is slower growth, but it is not slow enough for policy easing, particularly in the credit market.

The existing housing market shows more signs of slowdown with 22 cities reporting falling prices. Existing home prices increased only 0.3 percent, one of the widest single-month gaps in recent years.

This Chinese article says "the turn" to broad home price declines is underway.

21st Century: 22城二手房价格下跌 市场正接近全面下调拐点
Compared with the new home market, the price control of second-hand houses is relatively loose, and in many hot cities, second-hand house transactions have accounted for more than half of the market. The industry generally believes that the change in second-hand housing prices is more reflective of market trends.

Some institutions believe that the reality of the decline in second-hand housing prices in 22 cities indicates that housing prices are moving toward a downward turning point. But this view is controversial. The Shell Research Institute pointed out that the just-needed groups that are more sensitive to price are choosing to enter the market after the price stabilizes, and more and more owners also choose to raise the price. These leading indicators mean that there is limited room for future prices to continue to fall.
The real value of the renminbi for Chinese citizens is how much house it can buy. What will be the value in the yuan if a stimulus program causes Chinese homes to jump another 50 or 100 percent in price?

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