Modest gains in China’s new home prices give authorities breathing room

Updated 15 August 2019

Modest gains in China’s new home prices give authorities breathing room

BEIJING: China’s new home prices rose in July as the property sector held up as one of the few bright spots in the slowing economy, although easing momentum in some markets took immediate pressure off regulators to unleash major new curbs to deter speculation.
Average new home prices in China’s 70 major cities rose 0.6% in July from the previous month, unchanged from growth reported in June and marking the 51st straight month of gains, Reuters calculated based on National Bureau of Statistics (NBS) data on Thursday.
On a year-on-year basis, home prices rose at their weakest pace this year in July by 9.7%, slowing from a 10.3% gain in June.
Analysts said the moderate gains were a positive sign the market was not overheating. That helped the CSI300 real estate index recoup some of its earlier heavy losses following a major slide in global stock markets.
“Today’s data is actually pretty good, reflecting that tougher stance and not alarming at all,” said David Ji, Head of Research & Consultancy, Greater China at Knight Frank, referring to central policymakers’ July decision to not use the property market as a form of short-term stimulus.
“If I were a provincial official who has a ‘key performance indicator’ to hit, I would feel happy because it is clearly telling you the property market is off the peak.”
The politburo’s pledge in July not to overly stimulate the property sector, made at a high-profile work meeting, was interpreted by analysts as a warning to the investors against heavy bets on the market.
The Chinese government has clamped down on speculative investment in the housing market since 2016 to prevent a sharp correction as prices soared. There have also been growing concerns that high house prices are pushing up the cost of business and restricting consumer spending.
But efforts by some regional governments to attract talent through home purchase incentives, along with easing credit conditions have kept prices surprisingly resilient this year.
The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes, although the number of cities fell to 60 in July from 63 cities in June.
In a sign the market’s resilience may be waning in parts, property investment slowed to its weakest this year, data showed on Wednesday.
Concerns linger
Chinese authorities have sought in recent years to contain risks in the often volatile property market while not undermining growth in the broader economy.
The property sector directly impacts over 40 industries in China and a fast deterioration would risk adding to pressure the economy, which is slowing due to weak domestic demand and an escalating trade war with the United States.
While tightening measures have been rolled out across hundreds of Chinese cities, price trends have been uneven across the country.
Prices are holding up better than expected particularly in top tier cities, said Rosealea Yao, China investment analyst with Gavekal Dragonomics. Average prices in the four tier-1 cities — Beijing, Shanghai, Guangzhou and Shenzhen rose — 0.3% from a month earlier, quickening from a 0.2% gain in June, NBS data showed.
Pingdingshan, a city of 4.9 million in central Henan province, was the top price performer in July, with a robust monthly gain of 1.6%.
But economists also caution that the negative impact on the sector from the central government’s increasingly hawkish stance will only start to become more pronounced in two to three months.
China’s banks extended surprisingly fewer new yuan loans in July, reflecting subdued demand. New household loans, mostly mortgages, fell to 511.2 billion yuan in July from 671.7 billion yuan in June.
In a meeting on Thursday, the Shenzhen branch of China’s central bank said it will control second half growth of the city’s new real estate loans in a “reasonable” manner, according to state-owned Shanghai Securities News. It did not give details.
Home prices in tier-2 cities, which include most of the larger provincial capitals, increased 0.7% in July versus a 0.8% rise in the previous month. And Tier-3 cities rose 0.7% on a monthly basis, in line with June’s pace.
“I expect housing policies to tighten in China, especially for local governments that has infrastructure projects to support local GDP growth,” said Iris Pang, Greater China economist at ING.


Libya’s NOC says production to rise as it seeks to revive oil industry

Updated 22 September 2020

Libya’s NOC says production to rise as it seeks to revive oil industry

  • Libya produced around 1.2 million bpd – over 1 percent of global production – before the blockade
  • Libya’s return to the oil market is sustainable

LONDON: Libya’s National Oil Company said it expected oil production to rise to 260,000 barrels per day (bpd) next week, as the OPEC member looks to revive its oil industry, crippled by a blockade since January.
Oil prices fell around 5 percent on Monday, partly due to the potential return of Libyan barrels to a market that’s already grappling with the prospect of collapsing demand from rising coronavirus cases.
Libya produced around 1.2 million bpd — over 1 percent of global production — before the blockade, which slashed the OPEC member’s output to around 100,000 bpd.
NOC, in a statement late on Monday, said it is preparing to resume exports from “secure ports” with oil tankers expected to begin arriving from Wednesday to load crude in storage over the next 72 hours.
As an initial step, exports are set to resume from the Marsa El Hariga and Brega oil terminals, it said.
The Marlin Shikoku tanker is making its way to Hariga where it is expected to load a cargo for trader Unipec, according to shipping data and traders.
Eastern Libyan commander Khalifa Haftar said last week his forces would lift their eight-month blockade of oil exports.
NOC insists it will only resume oil operations at facilities devoid of military presence.
Nearly a decade after rebel fighters backed by NATO air strikes overthrew dictator Muammar Qaddafi, Libya remains in chaos, with no central government.
The unrest has battered its oil industry, slashing production capacity down from 1.6 million bpd.
Goldman Sachs said Libya’s return should not derail the oil market’s recovery, with an upside risk to production likely to be offset by higher compliance with production cuts from other OPEC members.
“We see both logistical and political risks to a fast and sustainable increase in production,” the bank said. It expects a 400,000 bpd increase in Libyan production by December.
The Organization of the Petroleum Exporting Countries and allies led by Russia, are closely watching the Libya situation, waiting to see if this time Libya’s return to the oil market is sustainable, sources told Reuters.