China: A visible moderation in home price inflation in February – Nomura

Analysts at Nomura note that the simple average of property price inflation across 70 cities of China continued to fall in February, to 0.2% m-o-m from 0.3% in January.

Key Quotes

“The number of cities with sequentially lower prices picked up to 16 in February from 13 in January, while the number of cities with flat or higher prices fell again.”

“The moderation in average property price inflation was driven by Tier-1 and Tier-2 cities. Average property prices fell 0.4% m-o-m in Tier-1 cities in February, from a 0.2% fall in January. Home price inflation in Tier-2 cities moderated by 0.2 percentage points to 0.1% m-o-m, while in Tier-3/4 cities it was unchanged from last month (0.4%).”

“The four Tier-1 cities experienced a synchronised moderation in property prices. Property prices in Shenzhen and Guangzhou fell by 0.6% and 0.4%, respectively. Home prices in Beijing and Shanghai also declined, but less visibly.”

“The continued moderation in property price inflation, together with the weakening of major property market indicators (property sales, floor space newly started and land sales), adds to our conviction that the property market continues to cool. This may weigh on property investment growth in the quarters ahead.”