With all the noise China is making about rescuing its deflated property market the evidence of the depth Chinese developer and housing collapses were gaining momentum. It was the sixth straight month of decrease in new home prices, the steepest pace in the sequence, and the fastest fall since August 2015. China’s Average new home prices in China’s 70 major cities dropped another 1.6 percent year-on-year in October 2022. The fall follows on from a 1.5 percent decline the prior month earlier.
Property woes linked to the mounting debt crisis among developers as well as the impact of rising COVID cases and strict lockdowns or curbs.
China’s biggest cities property prices
Falls:
- Tianjin (-0.3% vs -4.3% in September),
- Chongqing (-0.6% vs 1.4%),
- Shenzhen (-0.7% vs 0.9%),
- Guangzhou (-0.3% vs -0.3%)
Rises:
- Increased much softer in both Beijing (0.4% vs 6.1%)
- Shanghai (0.3% vs 3.8%).
On a monthly basis, new home prices were down 0.3 percent, after a 0.2 percent fall in September. In the full work report of the Party Congress last month, China reiterated “housing is for living, not for speculation”
China Credit Squeeze as Property Prices Collapse
“Chinese regulators told the nation’s second-tier banks to dole out another 400 billion yuan ($56bn) of financing for the property sector in the final two months of the year, adding to a raft of support measures that have stoked recent gains in the beleaguered industry’s stocks and bonds. The money — in the form of loans, mortgages and bond investments — adds to the $85 billion of net financing that the country’s six largest lenders were told to extend in September, people familiar with the matter said…” November 11 – Bloomberg:
China’s weak recovery was faltering, while a new Covid wave is unfolding. China’s consumer (chiefly mortgage) loans were slightly negative, the first contraction since April. At $478 billion, y-t-d Consumer Loans are half of last year’s pace. 2022 Consumer Loan growth is down 44% from comparable 2019. At 6.4%, one-year growth is down from the 12.5% rate to start the year, to the weakest pace in decades.
China’s credit growth in October was alarmingly weak. China’s broad measure of Credit growth, Aggregate Financing (AG), expanded only $128 billion in October, down from September’s almost $500 billion and just over half of estimates. At $4.04 TN, y-t-d growth is almost 9% above 2021 (and down 8% from 2020, while up 34% from 2019).
“China’s deepening property crisis is piling pressure on a $1.6 trillion corner of the country’s onshore bond market, as cities and local administrations step in as white knights to bail out troubled developers in a state-backed bid to aid the sector. After replacing builders as the biggest buyers of land earlier this year, the nation’s so-called local government financing vehicles, or LGFVs, have now become the main purchasers of half-finished projects of defaulters including China Evergrande Group. Their increasing involvement in real estate has analysts raising red flags.” November 9 – Bloomberg
Source: Chinese NBS
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