China: Improvement in home price inflation – Nomura

Analysts at Nomura note that China’s simple average of property price inflation across 70 cities continued to rise in April by 0.2 percentage points (pp) to 0.6% m-o-m.

Key Quotes

“The number of cities with sequentially higher prices increased to 58 in April from 55 in March, while the number of cities with lower or flat prices declined to 12 from 15.”

“The improvement in April was mainly due to lower-tier cities. Home price inflation in Tier-2 and Tier-3/4 cities picked up by 0.2pp and 0.1pp, respectively, to 0.5% m-o-m and 0.6, while property prices were stable in Tier-1 cities, with price moderations in Shanghai and Guangzhou fully offsetting the increases in Beijing and Shenzhen.”

“Despite sequentially higher property prices, we believe downside pressures on the property sector are looming. That said, Beijing could further fine-tune its policy stance to support stable growth which, in our view, could help cushion the pace at which the property sector cools and growth slows.”