CLSA’s Andy Rothman comments on China’s housing market:
China’s property developers have been working overtime, with housing starts rising 194% YoY in November. This follows 50%+ YoY increases in both September and October, driven by very low inventory levels and very high demand, as well as supportive government policies ( particularly access to bank credit for developers) designed to cool price growth by bringing more supply to the market next year.
In addition to slowing the growth rate of new home prices next year, the frenzied pace of housing starts – - coming on top of rising infrastructure spending – - also means that China’s demand for commodities and construction equipment will rise exceptionally fast over the next 6-9 months, leading us to believe that iron ore and copper prices will be stronger than expected.
From the WSJ:
China’s urban property prices grew at their fastest pace in 16 months in November, increasing concerns a market bubble may be forming and underscoring the challenge Beijing faces in sustaining the country’s economic recovery while avoiding excess.(…)
Property prices in 70 of China’s large and medium-sized cities rose 5.7% in November from a year earlier, accelerating from October’s 3.9% rise, National Bureau of Statistics data showed Thursday. (…) Prices in November rose 1.2% from October, accelerating from October’s sequential rise of 0.7%, the bureau said.(…)
The State Council, or cabinet, decided Wednesday that starting next year, sales of homes by individuals will be exempt from tax only after at least five years of ownership. The government in January had reduced the period to two years to encourage home sales.(…)
Investment in real-estate development, one of the main forms of private investment in China, rose 17.8% to 3.13 trillion yuan ($458.5 billion) in the January-November period from a year earlier, up from a revised 16.6% in the January-October period, the statistics bureau also said.(…)
Newly started real-estate construction surged 15.8% in the January-November period to 976 million square meters from the year-earlier period, up from just a 3.3% rise in the January-October period.
Nationwide property sales between January and November, including those in smaller cities, totaled 752 million square meters, up 53% from the year-earlier period, the bureau said.
Among the 70 large- and medium-sized cities in the statistics bureau survey, prices of newly built residential properties rose 6.2% in November from a year earlier, accelerating from a 4% rise in October.
Prices in the secondary market rose 5.5% in November from a year earlier, higher than October’s 4.6% rise.
Also from the FT today: Asia enjoys property boom
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