What you’ll learn about China's housing market
In this free 1–hour CHINADebate webinar, Robert Ciemniak will give you his solid, data-backed, analysis of what is happening in China's housing market, what is likely to happen, and, most importantly, why. In so doing, he will answer these and other questions...
- This cycle is something new–how are targeted Chinese government housing policies stimulating the market in some cities and tightening in others?
- Where does the demand that's driving the market come from, and how do you reconcile that demand with the supply situation?
- How much new construction is likely to come on line on the next five years?
- How is the nature of competition changing among developers?
- What are real factors driving China's second bull market in housing since 2010, and how long can these continue to propel the market upward?
- How can you, contrary to conventional wisdom, form a data-driven approach to China's housing market, and make solid analyses
Key Takeaways
- Housing and monetary policy easing and tightening cycles have been the key drivers of the housing markets at least since 2006
- We are at or close to the peak house price growth in the current cycle--expect a normal cyclical slowdown in the next months
- Aggregate cyclicality aside, price growth has been more divergent in the past year with some cities at their peaks and some at their lows
- Housing policy this time is much more localised, and divergent – while some cities are tightening, at the same time others are easing, depending on the local demand-supply situation
- Supply-side reforms are being implemented across cities, typically involving more control of land supply, while encouraging buyers from rural areas to buy in cities
- Oversupply is not a big issue anymore, as it is 'being handled' with clear signs of progress, and major cities clear inventory at a very fast pace and reasonable levels
- Expect new starts to pick up for full 2016, as it's been the case for Jan-Jun, reflecting earlier strong growth and record volumes in home sales
- ‘Product’ is increasingly the name of the game for developers in competition for buyers, where more discerning upgraders make a significant part of the demand
How China's City-Level Property Cycles Work
This provocative analysis comes from Robert Ciemniak and his colleagues at Real Estate Foresight.To better understand what's happening in the animation, watch Robert explain...
As You Watch the Animation
- Note the few times in the cycles when full-press government policies stop all price rises and even cause declines. This shows pretty dramatically that, for all the hand-wringing, the government has the tools to cool the market when it wants to.
- Pay special attention to how Tier 1, 2, & 3 cities change places with each other, depending on how rigorously the cooling policies are implemented in each city.
- For fun, watch how Shenzhen goes off the chart, then spectacularly crashes as the local policies kick in.
More on How This Works
A city stimulates its property market. Sales pick up, housing prices rise, and then spike. The local government, under direction from the central government, puts the screws on the market, and prices go down.
Investors and speculators then switch to a city with laxer policies. Prices spike; regulations tighten; prices go down. They move on.
After a city goes into down-cycle, the time will come to again stimulate its market. And, soon, back come the investors and speculators.
A pattern seen over and over again all over China.
But, speculators and investors aside, demand continues from families upgrading to better/larger apartments, replacing old-style housing, moving to other cities and from urbanization generally (not the urbanization rate is still only around 56%).
12M House Price Change in 100 Cities (Monthly June 2011—June 2016)
12M NBS New Home Price Change in 70 Cities (January 2012—October 2017)
12M vs 1M Price Growth (NBS) (Monthly Jan 2012—May 2017)
100s of Cities Bubble Up & Down As Policy Makers Press the Levers China hasn’t collapsed. And, the bubble hasn’t burst because there may not be just one big real estate bubble. Instead, there are 100s of sizable cities, each moving in its own cycle, each responding to how its local policymakers stimulate & tighten-stimulate & tighten, and each having performance divergent from that of other cities. Watch here to see how city-level markets bubble up and bubble down...
12M vs 1M Price Growth (NBS) (Monthly Jan 2012—May 2017)
Shanghai Price Movements
