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Housing market correction the main hard-landing threat for China - ING

FXStreet (Łódź) - Prakash Sakpal, economist at ING, offers a preview of Chinese July New Home Price data, due out on Monday.

Key quotes

"The 70-cities new home price indexes for July are due on Monday, August 21, at 9.30am local time. A record 55 of 70 cities reported sequential declines in new home prices in June, up from 35 in May."

"We view the current housing downturn as more of an oversupply than weak-demand problem."

"Data earlier this week showed that real estate development firms continued efforts to reduce excess supply in July."

"Growth of the fixed investment in the sector slowed to 13.7% YoY YTD from 14.1% in June. Housing starts contracted 16.4% YTD in July (prior -19.8%) and growth of homes under construction slowed to 8.2% YTD (prior 8.3%). New home sales contracted 9.4% YTD (prior -7.8%)."

"We consider the housing market correction the main hard-landing threat."

"Recent reports of rising number of cities relaxing house purchase restrictions – by end-July about 60% of 46 major cities had relaxed or cancelled such restrictions – are encouraging though with a large inventory overhang they provide little hope of a quick rebound in prices."

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