China: Growth in house prices inches down in June
House prices in 70 large- and medium-sized cities rose 0.6% in June in month-on-month terms according to a weighted average index calculated by Thomson Reuters from data issued by the National Bureau of Statistics (NBS). The print was below the 0.7% increase in May. According to the NBS, the sale prices of newly constructed residential buildings increased in 63 cities (67 in May).
House prices rose 10.3% annually in June, below the 10.7% rise in May and the lowest result in four months. Annual average growth in house prices increased from 8.5% in May to 9.3% in June, the strongest result in 19 months.
About the recent deceleration in the housing market, Ting Lu, Lisheng Wang and Jing Wang, economists at Nomura warn that:
“We expect the current property downcycle to last longer and be more severe than previous ones, due to strong headwinds in low-tier cities and Beijing’s cautious stance on the property sector. The PSL-backed cash settlement shantytown renovation program, which has led to over-investment in many low-tier cities, cannot be sustained indefinitely.”