FT: Housing market trims losses

Chinese house prices fell at a slower pace in November, in a tentative sign that the sickly housing market may soon bottom out, lightening its drag on the broader economy, the Financial Times reported yesterday.
House prices on new homes fell by an average of 3.6 per cent in November from a year earlier, according to Financial Times calculations based on the government’s survey of 70 large and medium-sized cities. That is the largest annual drop on record since the government stopped publishing nationwide price data at the beginning of 2011.
But on a monthly basis, November’s data showed signs of improvement. New house prices fell by 0.6 per cent in November from a month earlier, down from declines of 0.8 per cent in October and 1.0 per cent in September.
“The central bank’s policy to aid the market is having an impact,” said Yan Yuejin, researcher at E-house China R&D Institute, a Communist party-linked research organization. “The pace of destocking in various cities is accelerating . . . There is hope that first-tier cities will halt their monthly declines and begin a rebound by year end.”
Indeed, according to FT, data out last week showed property sales volume at an 11-month high in floor-area terms in November, although it was still down 13 per cent from a year earlier.
House prices have now fallen year-on-year for three straight months, while month-on-month declines began in May.
“House-price decline will continue going into next year, but the pace of adjustment will moderate,” Zhu Haibin, chief China economist at JPMorgan, wrote in a note, cited by the Financial Times. Mr Zhu expects the market will bottom out at a level 5-10 per cent below the peak hit in 2013.
But while the magnitude of price falls looks moderate, the impact of the slowdown on new construction and on demand for basic commodities such as steel, cement and copper will continue to exert a drag on the economy next year, economists say.
A flash manufacturing survey released on Tuesday showed the sector contracting last month for the first time since May. Figures out last week showed industrial production and investment both lower.
“We expect the government will continue to ease housing policies in 2015 to slow down the adjustment process,” said Mr Zhu, as quoted by FT.