Q: When did the government start to provide support to the housing market in previous downturns?Sales volume is down even more year-on-year. According to April data out this week, 44 of 70 cities saw existing home prices decline in one of the categories of small, medium and large homes. In the new home category, 28 of the 70 cities saw mom declines in at least one category. In both cases, it was mainly larger homes, 144 sqm and above. Overall, only 8 cities saw their new home price index fall mom, but if the market continues to cool at the current pace, that number could increase very quickly. Time to policy easing is only a few months, based on history. I'm not betting on one though.
A: With further deterioration of the housing market in the coming months, we expect the government to provide policy support to prevent prolonged housing downturn that could trigger a vicious cycle on the economy.
The exact timing of such support is difficult to predict, but we summarize below the indicators that have triggered government support for the industry during previous cycles:
Decline in quarterly property sales volume yoy (10%-20% yoy decline);
Decrease in property prices mom in most cities (about 50 out of 70); and
Land transaction premium over government base land price approaching zero.
We believe poor sales volume/sell-through ratio would lead directly to slow land acquisition and possible price cuts.
Schedule for Week of May 5, 2024
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This will be a very light week for economic data.
*----- Monday, May 6th -----*
2:00 PM: *Senior Loan Officer Opinion Survey on Bank Lending Practices* for...
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