Property Market Chartbook, April 2022

Property market conditions are deteriorating as China faces new COVID outbreaks and continues to respond with lockdowns and other restrictions, reducing property sales. Average housing prices are now declining by 9% nationwide in Q1 2022 according to NBS data, the largest quarterly drop in history. Developers are facing a significant credit crunch from declining presales revenues. Conditions in Shenzhen offer some early hints of the scope of a potential sales rebound after lockdowns end.

Posted April 25, 2022
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The 2022 Policy Outlook After a Disappointing April

The PBOC has abruptly shifted policy messaging in April, and disappointed markets by failing to deliver a cut to the MLF rate despite transparently weak credit demand throughout China’s economy. For the rest of the year, fiscal policy support via a budget revision may be necessary, but interest rates still need to move lower, and the PBOC will be dragged into cuts sooner or later. More troubling is the mixed messaging from Chinese policymakers, which is damaging confidence in a meaningful policy response to counter the lockdown and property-led economic slowdown.

Posted April 24, 2022
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Q1 2022 China Macro Data Recap

Headline real GDP growth reportedly accelerated to 4.8% y/y in Q1 from 4.0% in Q4 last year. However, given the deepening slowdown in the property sector and COVID-related restrictions on activity, there are few plausible explanations for faster economic growth early this year. Lockdowns will exact a rising economic cost in the months ahead, while credit growth and credit demand remain tepid, reducing financing available for new investment. Caution in monetary easing raises the need for additional fiscal policy support, which may require a rare mid-year budget revision.

Posted April 18, 2022
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