Chinese home prices show modest increase

Updated 19 August 2012

Chinese home prices show modest increase

BEIJING: China’s home prices rose 0.1 percent in July from June, a second month of modest uptick that raises the risk Beijing may seek to bolster a two-year campaign to curb housing inflation but which also weighs on the wider economy.
Home prices fell 1.5 percent year-on-year, according to Reuters calculations based on data from the National Bureau of Statistics, but the trend of month-on-month falls seen in October through to May has been reversed in June and July.
Home prices rose in 49 of 70 major cities monitored by the National Bureau of Statistics in July in month-on-month terms, up from 25 in June, adding to recent signs of an end to the government-induced property market downturn.
“A new trend does appear to be materializing as home prices continue on an upward trajectory after the Chinese government began to loosen certain levers to address concerns around a slowing economy,” Mark Budden, China area leader at consultancy EC Harris, said in a note after the data.
“It’s still a little premature to label the slowdown over as certain macro-economic factors could yet threaten this recovery and, if the market does begin to heat up again, the central government is likely to step in to curb speculation,” he added.
The shift follows a slew of pro-growth measures from Beijing since autumn 2011, as well as unauthorized policy relaxation by more than 30 local governments that has revived housing demand.
The State Council, or China’s cabinet, sent eight inspection teams in late July to find out why home prices were rising.
China’s official news agency, Xinhua, reported that the inspectors found some problems needing “particular attention,” including local easing measures and some weak supervision.
There is speculation in Chinese media that China is set to hike transaction taxes, or expand a property tax beyond the current test beds of Shanghai and Chongqing.
However, the slowing broad economy is a complication.
Real estate directly affects around 40 other business sectors and was a brake on growth in the first half of 2012. The economy grew 7.6 percent year on year in the second quarter, its slowest in three years. A Reuters poll forecasts full-year growth of 8 percent, which would be the lowest since 1999.
A further deterioration in global economic activity is an added risk for policymakers considering more property curbs.
Recent data showed Chinese exports rose just 1 percent in July from a year ago, new loans hit a 10-month low, and factory output grew at its slowest in three years.
The disappointing data and reports on more property tightening steps nudged down property shares and the broad stock market in China in the past two weeks.
Chinese Premier Wen Jiabao said earlier this week: “The downward pressure on our economy is still big and the difficulties may last for a while.”
He spoke after a visit to the coastal export province of Zhejiang. In year-on-year terms, China’s home prices are still falling. The 1.5 percent fall in July was the fifth such decline, according to Reuters’ calculation of the official data published on Saturday.
Home prices fell in 58 of the 70 cities in July from a year earlier. They fell 0.7 percent in Beijing and dropped 1.5 percent in Shanghai.
Official data on Aug. 9 showed Chinese property sales increased 26.3 percent in July from a year earlier, quickening from a rise of 6.9 percent in June, reinforcing signs of a recovery in the property sector.
But annual real estate investment growth slowed to a three-month low under the continuing government curbs.


Pakistan’s central bank keeps key policy rate unchanged at 13.25%

Updated 25 min 26 sec ago

Pakistan’s central bank keeps key policy rate unchanged at 13.25%

  • SBP keeps the GDP growth forecast unchanged at 3.5 percent and inflation at 11-12 percent for FY20
  • The key policy rate was last raised in July 2019 after the country secured $6 billion IMF bailout package

KARACHI: The State Bank of Pakistan (SBP) on Friday decided to keep the policy rate unchanged at 13.25 percent, saying the projection for average inflation for FY20 broadly remained unchanged at 11-12 percent and maintaining the current monetary policy stance was appropriate for the country.
The central bank had previously raised the key policy rate back in July after the country secured $6 billion bailout program from the International Monetary Fund (IMF).
“The decision reflected the Monetary Policy Committee’s view that recent developments have had offsetting implications for the inflation outlook,” the bank said in a statement. “On the one hand, recent inflation outturns have been on the higher side. On the other, the causes behind these outturns have primarily been increases in food prices which are expected to be temporary.”
The SBP believes that inflation, which is at the higher side at present due to rise in food prices, will cool down over the next two years. 
“The MPC [Monetary Policy Committee] noted that recent outturns of month-on-month inflation had been higher than in previous months and if sustained could affect inflation expectations,” the statement added. “Nevertheless, in light of the temporary nature of these increases, continued softness in domestic demand, and recent appreciation of the currency on the back of improving market sentiment, the MPC was of the view that inflationary pressures were expected to recede in the second half of the fiscal year.”=
The central bank kept its projection for GDP growth for FY20 unchanged at around 3.5 percent as the recent economic data suggest that economic activity is strengthening in export oriented and import competing sectors while inward oriented sectors continue to experience a slowdown in activity.