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China: September new home price data preview - ING

FXStreet (Delhi) – Prakash Sakpal, Economist at ING, suggests that the 70-cities new home price indexes for September are due tomorrow at 9:30am local time and the trend has been rising number of cities reporting increasing sequential new home prices (first figure), which we think persisted.

Key Quotes

“Until August the improving home price trend and rising home sales occurred against a backdrop of falling housing starts. September is a turnaround month. A 16.7% YoY bounce in housing starts was the first growth in a year (second figure) and it narrowed the year-to-date contraction in starts to -13.5% from -17.9% in August.”

“Growth in home sales, residential floor space sold, slowed to 8.8% from 15.6% in August but the 8.2% YTD growth was up from 8% in August. The first increase in housing starts in a year sustains hope that the historical – since 2010 – relation between sales and starts is intact and the latter will begin become a growth driver in 2016.”

“The PBOC injected CNY 105.5 billion ($16.6bn) into the banking system yesterday via the medium-term lending facility. The PBOC open market operations, including MLF, and RRR are its tools to sterilize the domestic liquidity implications of swings in capital flows.”

“The latest MLF injection may be construed as despite above expected 3Q GDP growth things aren’t yet good enough to swing capital outflows into inflows. We reiterate our forecast of one more 50bp RRR cut in the current quarter.”

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