FXStreet (Delhi) – Research Team at Nomura, suggest that Chinese demand may be back to a more normal level after being driven higher by policy easing but property price m-o-m gains may have passed their peak as sales growth stabilises.
Key Quotes
“Price gains in Tier-1 cities eased further to 2.0% m-o-m in September from 2.1% in August, while in Tier-2 cities they were 0.3%, unchanged from August and in Tier-3 cities largely flat in September.”
“Stabilising prices may imply that demand has returned to a more normal path after being driven higher in previous quarters by policy easing. Indeed, property sales growth slowed in September to 9.0% y-o-y and in August to 14.7% in volume terms from the recent peak of 18.9% in July.”
“This suggests to us that the positive effect from policy easing on property demand may be fading, which does not bode well for property investment. This reinforces our view that property investment growth may turn negative in 2016.”
“We remain comfortable with our forecast for real GDP growth slowing to 6.4% y-o-y in Q4 this year, and further to 5.8% in 2016. We maintain our call for moderate fiscal stimulus from the central government and continued monetary easing.”
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