China: April home price data preview - ING

Prakash Sakpal, Economist at ING, suggests that sustaining China’s strong housing starts growth is necessary for supporting real estate FAI, which is necessary for meeting the official 10.5% total FAI growth target.

Key Quotes

“The 70-cities new home price data for April is due tomorrow at 9.30am local time. In March, 62 cities reported sequential price increases, up from 12 a year ago, and 8 cities reported decreases, down from 49 a year ago. We think these trends persisted based on steady strong home sales and mortgage loans in April. However, press reports of cooling measures in the overheating Tier 1 cities lead us to expect slower sequential home price inflation in April. March’s 3.1% MoM simple average increase in Tier-1 cities pushed the year-over-year increase to a record 25.9%.

The 18% YTD housing starts growth in April was a sizable positive swing from 15% contraction in 2014 and 2015. Sustaining this is necessary for supporting real estate FAI and the total FAI growth this year. The official total FAI growth target for this year is 10.5% (10.5% YTD in April).”