2014-11-18

Chinese New Home Prices See Small Bounce in October

New home prices fell 0.78% in October and they are down 2.49% yoy. The change in existing home prices was almost exactly the same: 0.84% drop in October, 2.52% drop yoy. This is an improvement from the month before and the bulk of the improvement came in the shrinking losses, with fewer large declines pulling down the average. Prices have come down quite a bit this year though, and as I point out below, some segments of the market are nearing the price levels they were at in 2010. In some areas that are already below 2010 levels. A combination of price declines and general wage increases has made housing a lot more affordable that it was back in 2010.

First tier cities are still up double-digits over 2010, but demand for housing is always strong in those cities. The main issue moving forward is the third and fourth-tier cities with massive supply overhang; they're going to have problems even if the price declines flatten out in the months ahead. Small and medium developers are still in trouble as well.

March: 4 cities saw declines in price mom, 10 cities were flat, 56 were up.
April: 8 cities saw declines in price mom, 18 cities were flat, 44 were up.
May: 35 cities saw declines in price mom, 20 cities were flat, 15 were up.
June: 55 cities saw declines in price mom, 7 cities were flat, 8 were up.
July: 64 cities saw declines in price mom, 4 cities were flat, 2 were up.
August: 68 cities saw declines in price mom, 1 city was flat, 1 was up.
September: 69 cities saw declines in price mom, 1 city was flat, 0 were up.
October: 69 cities saw declines in price mom, 1 city was flat, 0 were up.

Qinhuangdao saw prices slide 1.5%, largest on the month. Zhengzhou was flat. Overall, the range of price changes was smaller than in previous months.

70 city new home price changes by market segment: below 90 sqm prices fell 0.8% mom; 90-144 sqm prices fell 0.8%; above 144 sqm prices fell 0.9%.

70 city existing home price changes by market segment: below 90 sqm prices fell 0.8% mom; 90-144 sqm prices fell 0.8%; above 144 sqm prices fell 1.0%.

Here's a number to consider: the average price increase of existing homes larger than 144 sqm since 2010 is now 0.96%. Even for homes less than 90 sqm, the increase is down to 4.5%.

Data: 2014年10月份70个大中城市住宅销售价格变动情况


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