Chinese Housing Recovery Spreads in April

New home prices increased 0.6 percent nationally, with only two cities reporting falling prices. Existing homes increased 0.5 percent.

Reuters: China's solid home price growth faces bubble, trade war risks

Beijing has repeatedly called on local governments to take more responsibility in keeping the frothy market under control. But pent-up demand for housing, easier credit conditions and some local governments relaxing purchase restrictions may be further fanning price gains in a market where fear of missing out is strong.

There's no stimulus coming because China has already reignited the housing market. Credit creation was 5 percent of GDP in January and that credit is flowing into real estate. Central government officials have been banging the table about "houses are for living in, not for speculation," and now local governments are ratcheting up buying restrictions. As has always been the case, however, buying restrictions have little impact on the market. Credit growth drives home prices. If China ends up launching another major stimulus amid a domestic slowdown and intensifying trade war, the housing market is primed for lift-off. With USDCNY already near the key 7.00 level, a "hyperinflationary" blow off in nominal home prices could be right around the corner. Houses are already an inflation-protection savings vehicle for average Chinese savers and investors. With strict capital controls, capital flight out of the yuan is most likely to flow into major currencies (USD,EUR), housing, gold, cryptocurrency, and over the longer-term, A-shares.