China: Home price inflation moderated in January – Nomura

Analysts at Nomura note that the arithmetic average of property price inflation across 70 cities of China ticked down by 0.2 percentage points (pp) to 0.3% m-o-m in January.

Key Quotes

“The number of cities with a month-on-month moderation in prices rose to 13 in January from 7 in December, while the number with flat or higher prices fell.”

“The January number was weighed on by Tier-1 and Tier-3/4 cities. Home price inflation in Tier-1 cities was -0.2% m-o-m, down from -0.1% in December, while that in Tier-3/4 cities dipped by 0.2pp to 0.4% m-o-m. Home price inflation in Tier-2 cities was unchanged from December at 0.3% m-o-m.”

“Among Tier-1 cities, Shanghai and Guangzhou saw the most visible moderation in home prices (-0.4% m-o-m), prices in Shenzhen were unchanged, but prices in Beijing ticked higher.”

“The moderation in January property price inflation adds to our conviction that the property market continues to cool. We expect a continued slowdown in property investment and sales growth through this year, weighed on by tighter liquidity conditions and reduced home affordability due to previous price surges.”