China:new home prices rose further in September
The National Bureau of Statistics (NBS) released 70-city house price index for September.
Compared to the previous month, new home prices declined in 21 cities in September (vs. 26 citiesin August), stayed flat in 10 cities and increased in 39 cities. As such, 30.0% of the cities registeredm/m price decline in September, compared to 37.1% in August (table). Based on NBS data,national house prices on average rose 0.2%m/m in September, which is the sixth consecutivemonth of increases.
Compared to one year ago, house prices declined in 58 cities in September, compared to 61 inAugust. Tier 1 cities continued to outperform. Shenzhen’s new home prices continued to outperform,jumping 4.0%m/m nsa in September, and were 38.3% higher compared to one year ago. This easilymade Shenzhen the best performing market in the past 12 months. Shanghai came in second, withnew home prices rising 1.9% m/m nsa in September and 9.7%oya in the past 12 months. In Beijingand Guangzhou, new home prices increase were relatively modest at 1.1% and 1.4%m/m nsa,respectively, in September. Based on NBS data, national house price on average fell 2.1%oya inSeptember, compared to -3.3%oya in August.
The NBS readings are consistent with the house prices data released by Soufun, a private real estatestatistics provider. Soufun data show that national house prices rose 0.3% m/m nsa in September,adding to the rise at 1.0%m/m, nsa in August. Compared to the same period last year, national houseprices rose 1.4%oya in September (vs. 0.1%oya in August), which is the second consecutive monthof positive growth. Among the 100 cities included in Soufun’s survey, 41 cities registered houseprice decline (m/m) in September (vs. 49 cities in August).
According to NBS data, housing market activity remained on the strong side in September, but themomentum slowed down. Home sales area rose 8.8%oya in September (compared to 15.6%oya inAugust), and home sales value rose 15.7%oya in September (compared to 31.5%oya in August).
Meanwhile, real estate investment growth continued to ease to 2.6%oya, ytd in September(compared to 3.5%oya, ytd in August). This translates into a 2.8%oya decline in the month ofSeptember, the second consecutive negative print this year. However, total floor space started rose16.7%oya in September, compared to -17.6%oya in August.
Moreover, land sale revenue registered at 283.8 billion yuan (3.5%oya) in September, compared to217 billion yuan (-38%oya) in August. This is the first month of land sale revenue increase this year.
In 3Q, land sale revenue declined by 27%oya, compared to -41%oya in 2Q and -36%oya in 1Q.
Looking ahead, the divergence between housing transactions/prices and construction activity willlikely persist for sometime. Regarding market activity, the strong momentum in property transactionhas continued through October (see: “China Property: Strong momentum to continue”, Ryan Li,October 19). As such, for the financial sector, the rebound in housing transactions, the bottoming upof housing prices, and housing policy adjustment help to improve the cash-flow for real estatedevelopers, thus the financial risk related to the housing market has been contained.