CASS: Sharp Housing Correction Coming in September, Concentrated in Hot Cities

Ni Pengfei of CASS says a deep correction will begin in September and last into the first half of 2017. The correction may be concentrated in the hot second-tier cities that have seen the largest increase in price and sales, and the the impact on the broader economy will be larger because the decline will also influence third and fourth-tier cities. The rising inventory which has plagued third- and fourth-tier cities will expand into second- and third-tier cities as the correction unfolds.

JRJ: 社科院专家:中国楼市将现短期调整
This year in September to the first half of next year, the property market in general will be a short-term adjustment, adjust the depth of the city is more concentrated. The dimension of time, the real estate sales prices and sales volume was down trend growth or the growth rate or the volatility of real estate investment. Adjustment may be slightly late, but not absent. Spatial dimension, and a second-tier cities will focus depth adjustment, is expected to increase urban housing stock continues to spread from the following four-tier cities to second and third tier. Compared with the previous, this cycle is the market more time to start, but the concentration of market overheating unprecedented time and space, depth adjustment cities are relatively concentrated. Although the four-tier cities and the following adjustment flexibility of small, but because of a second-tier cities are not only the country's total hot large market share, and strong wind vane significance, therefore, this country's housing market correction and its impact on the macroeconomic impact would be more significant.
As has been discussed here in several posts, the slowing credit market will end the rally in home prices:
First, the decision to change the fundamentals, the market is cyclical adjustment is inevitable. Decline in real estate for the last round of macroeconomic and downstream, from the second half of 2014, the central government began to turn positive and regulation continue to overweight, but not until mid-2015, the property market (volume and price) began to accelerate into the slow path, but the entire 2015 investment swooping decline in confidence in this major financial institutions, leading financial institutions for credit mortgages and development loans disgust. In early 2016 a large number of serving and monetary policy to the inventory, completely changed the expectations of financial institutions, mortgage loans continued to grow more than 50% at the same time, delay the development of the enterprise funds in place gradually increase to 1 - More than 15 per cent in July. The future, the overall monetary policy will tend to be neutral, to obtain the release of the stage in the past year even after the overdraft, the stock of urban population will slow down consumer demand. Credit crunch and market Qudan, resulting in volume and price drop will result in investment slowed. From mid-2015 to the end of 2016, the rise of the market will reach one and a half.
He sees some counteracting forces such as recent reforms designed to aid rural families, which will increase demand for urban housing. On the downside, he sees some cities being hard hit by the sudden exit of speculators, causing a blow to market confidence across the nation:
Some potentially valuable city continue to be discovered and turns to speculation that some four-tier cities will be affected by the radiation, infection and impact. Later it will cause central importance, and instructed the relevant city government has introduced more stringent financial, taxation or administrative policies to curb speculation, which led to substantial investment will quickly disappear or teleport. Hot and overdraft potential of the city after the sharp adjustment in the downturn. The national property market confidence will be negatively affected.
He suggests governments prepare contingency plans now.

And some of the hot cities have only begun rolling out buying restrictions in July and August......

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