China's Feb Second-Hand Home Prices Narrows for Seventh Straight Month
The average price of second-hand residential properties across 100 Chinese cities fell by 0.4% month-on-month in February, following a "Mini Spring" rally that has boosted property transactions in major urban centres, where sales of the top 100 Chinese real estate companies increased an annual 17.3% in February. The narrowing decline marks the seventh consecutive month of price reductions, as policy support and the traditional marketing season sustain the stabilisation trend in the housing market. Despite a year-on-year fall of 7.3%, average prices are still higher than pre-pandemic levels.
This modest easing in second-hand home prices suggests that the Chinese property market is slowly regaining momentum after the COVID-19 pandemic's disruption, but may not be out of the woods yet.
Will the sustainability of this trend depend on whether government policies to promote housing demand continue to be effective in addressing supply chain issues and encouraging new construction?
The average price of second-hand residential properties across 100 Chinese cities fell by 0.4% month-on-month in February, according to a report by a Chinese real estate research institute, narrowing for the seventh straight month. Following the implementation of fresh policy support late last year aimed at giving the property sector a boost, a "Mini Spring" rally is on the cards for March in major urban centres. The sales of the top 100 Chinese real estate companies increased an annual 17.3% in February, however cumulative sales for January and February fell by 5.9% year-on-year.
This modest price drop may be insufficient to revive investor confidence in China's ailing property market, which has been battered by years of regulatory crackdowns and a slowing economy.
How will the Chinese government balance its efforts to stimulate the property sector with concerns over debt sustainability and the risk of further asset bubbles?
China's housing minister has expressed optimism about the country's property sector, citing improving market confidence as policymakers aim to set a more upbeat tone for the economy in 2025. Despite several tough years for the real estate industry, the minister stated that the market has shown signs of stabilisation since January and February. However, analysts predict that home prices will continue to drop further this year, with some estimates suggesting a decline of up to 30% since 2021.
The government's efforts to provide financial support to qualified developers may help alleviate cash crunches and stabilize the market, but it remains unclear whether these measures will be sufficient to reverse the trend.
Will China's property sector recovery be driven by domestic consumption or will international trade pressures continue to pose a significant challenge?
China's consumer prices dropped for the first time since January 2024, falling 0.7 percent year-on-year in February, as authorities struggle to kickstart spending amid a pandemic-induced slump in domestic consumption.The country's key measure of inflation declined more sharply than forecast, reversing the uptick recorded in January when Lunar New Year festivities boosted inflation. The steep decline is attributed to various factors including the shift in lunar new year celebrations, holidays, and price fluctuations of international staple commodities.According to Dong Lijuan of the National Bureau of Statistics, the drop was primarily caused by these seasonal adjustments.
This decline could signal a more pronounced impact on China's economic growth as domestic consumption remains under strain from the pandemic.
How will China's efforts to stimulate consumer spending through targeted policies and monetary easing affect its ability to sustain long-term economic recovery?
China's consumer inflation in February fell at the quickest pace since January 2024, while producer price deflation persisted. The drop in consumer prices was largely driven by a decline in food and energy costs, which decreased by 3.2% and 1.8%, respectively. The slowdown in price growth is seen as a sign of moderating demand in China's economy.
This trend may signal a shift away from the high-growth trajectory that China has experienced in recent years, potentially affecting global trade dynamics.
How will China's slowing inflation rate impact its ability to implement policies that support economic growth and job creation?
Consumer prices fell in China in February for the first time in 13 months, driven by weak demand and the early timing of the Lunar New Year holiday. The National Bureau of Statistics reported a 0.7% drop in consumer prices compared to last year, with prices down 0.2% from January on a monthly basis. As policymakers face flat to falling prices, they risk creating a deflationary spiral that could drag down the economy.
This slowdown highlights the vulnerabilities of China's economic model, which relies heavily on government subsidies and stimulus packages to drive growth, leaving it exposed to external shocks.
How will China's efforts to reinvigorate domestic demand through measures such as infrastructure spending and tax cuts impact its ability to address the underlying structural issues driving deflation?
Australia's property market emerged from a shallow downturn in February as the first rate cut in over four years lifted buyer sentiment, although the still-high borrowing costs and elevated prices are clouding the outlook. Figures from property consultant CoreLogic showed prices across the nation rose 0.3% in February from January, ending three months of declines or no growth. The Reserve Bank of Australia has cautioned that any further easing will be gradual, with market pricing suggesting just two more rate cuts to 3.6% by the end of the year.
As housing markets begin to recover, policymakers must consider the unintended consequences of low interest rates on household debt levels and financial stability.
Will Australia's experience in navigating a rate-cut induced housing market revival serve as a model for other countries struggling with similar economic challenges?
China's deflationary economy is intensifying, with the country's consumer price index falling to -0.7% in February, sparking concerns about its impact on growth. As a result, retailers are becoming increasingly desperate to attract customers, with some stores offering flash sales four times a day, including the Wankelai store in Beijing, which sells clothing, snacks, and basic household products. The strategy is driven by consumers who are grappling with uncertainty about jobs and incomes, leading them to seek value-for-money purchases.
Retailers' desperation to compete on price could have far-reaching consequences for traditional retail models, potentially exacerbating deflationary pressures.
How will policymakers address the root causes of China's economic woes and ensure that its growth is sustainable in the long term?
Contracts to buy US previously owned homes plunged to a record low in January as higher mortgage rates and house prices reduced affordability for prospective buyers. The National Association of Realtors (NAR) said its Pending Home Sales Index, based on signed contracts, dropped 4.6% last month to 70.6, an all-time low. Economists had forecast contracts falling 1.3%, but the actual decline was much higher, reflecting the significant impact of elevated mortgage rates and house prices.
The escalating affordability crisis in the housing market could have broader implications for consumer spending and economic growth if left unchecked.
How will policymakers respond to the growing trend of rising home prices and mortgage rates, particularly among low-income households who are often most vulnerable to these price pressures?
China's factory activity expanded at its fastest pace in three months to 50.8 in February, according to a private-sector survey, as millions of migrant workers returned to work after an extended Lunar New Year holiday. The seasonally adjusted Caixin/S&P Global manufacturing purchasing managers' index beat expectations and accelerated from 50.1 in January and 50.5 last December. This growth is attributed to "demand strengthened from foreign clients" due to U.S. importers front-running tariffs.
The escalating trade tensions and potential countermeasures from Beijing could further disrupt China's manufacturing sector, which has already faced challenges related to domestic demand and a prolonged real estate downturn.
What impact will the upcoming government stimulus plan unveil at the National People's Congress have on China's economic recovery in 2025, particularly with regards to addressing persistent disinflationary pressures?
China's manufacturing activity expanded at the fastest pace in three months in February as new orders and higher purchase volumes led to a solid rise in production. The official purchasing managers' index (PMI) rose to 50.2 in February, beating analysts' forecasts, but doubts remain about whether this upturn can be sustained amid a trade war with the US. Chinese policymakers are expected to announce economic targets and fresh policy support next week, which investors will watch closely for signs of further support for the struggling property sector.
The resilience of China's manufacturing sector in the face of global headwinds could serve as a model for other countries facing similar challenges, highlighting the importance of domestic policy interventions in supporting growth.
Can China's policymakers successfully balance economic stimulus with the need to address rising debt levels and financial vulnerabilities, or will these efforts exacerbate existing problems?
Mortgage rates have fallen since February 1, offering homeowners a chance to refinance or buy a new home. According to Zillow data, the current 30-year fixed interest rate is 6.27%, down 28 basis points from its level at the beginning of February. The 15-year fixed rate has also decreased, sitting at 5.57%, which is 31 basis points lower than this time last month.
This downward trend could signal a shift in the housing market, with decreasing rates potentially leading to increased buyer activity and sales volume.
Will the recent decrease in mortgage rates continue, or will it be followed by an increase as interest rates are influenced by inflation and economic indicators?
Pending US home sales slid to an all-time low in January as high mortgage rates, record-high home prices, and possibly the terrible weather last month hindered those seeking to buy. The National Association of Realtors said Thursday that its Pending Home Sales Index, which is an indicator of home sales based on contract signings, declined 4.6% to 70.6 last month. Despite stretches of high winds and low temperatures, sales in the Northeast rose modestly.
High mortgage rates, record-high home prices, and weather-related factors may be a perfect storm that underscores the vulnerability of the US housing market to external shocks.
As homebuilder stocks continue to plummet, what are the implications for small-time homeowners and renters who are struggling to find affordable options in the current market?
The average rate on a 30-year mortgage in the US has fallen for the sixth consecutive week, reaching its lowest level since December, providing a boost to purchasing power for home shoppers as the spring homebuying season gets underway. The latest decline brings mortgage rates to their lowest point since September last year, but still remain above the record low of 2.65% set over four years ago. This modest decrease in mortgage rates is expected to have a positive impact on consumer confidence and purchasing power.
The steady decline in mortgage rates this year may not be enough to overcome the affordability equation for many prospective home shoppers, particularly first-time buyers who lack equity from an existing home.
How will policymakers address the mismatch between declining mortgage rates and rising housing prices, which continues to hinder homebuying activity among would-be homeowners?
Homebuying activity has plummeted to its lowest level on record in January, with the National Association of Realtors' Pending Home Sales Index dropping 4.6% from a month earlier and reaching an all-time low of 70.6. The decline was driven by cold weather, unaffordable prices, and higher mortgage rates that made it difficult for buyers to secure financing. With home contract signings capped at historic lows, the market is expected to show signs of life in the coming months as interest rates potentially ease.
The sharp contraction in housing contract activity highlights the vulnerability of the US economy to extreme weather events and the ongoing struggle of homebuyers to overcome high prices and mortgage rates.
As the market enters a new cycle, will policymakers be able to find a balance between supporting homeownership and addressing the root causes of affordability, or will the squeeze on buyer demand continue to drive prices higher?
China's consumer price index in February missed expectations and fell at the sharpest pace in 13 months, while producer price deflation persisted, as seasonal demand faded and households remained cautious about spending amid job and income worries. The government has vowed to boost consumption through various measures, but analysts expect deflationary pressures to continue. China's economy is still struggling with weak consumption capacity and willingness.
The persistence of deflationary pressures highlights the need for more proactive fiscal policy, particularly in countries like China where exports face significant risks from global trade tensions.
What role will technological advancements play in reviving consumer demand and helping China overcome its economic challenges, or will they be insufficient to offset the underlying structural issues?
Consumer prices in China have fallen for the first time in a year, with authorities struggling to revive spending amid intensifying trade headwinds. The country's exports are expected to be impacted by US tariffs, which could limit economic growth this year. A prolonged trade war would likely keep inflation at bay, but also mean that consumers cannot rely on exports for strong economic recovery.
This deepening slump highlights the vulnerability of China's economy to global events, particularly those related to international trade and politics.
How will China's government implement fiscal policies to mitigate the effects of a trade war on domestic demand and stimulate consumer spending?
US mortgage rates declined last week to an almost three-month low, sparking lending activity for home refinancing and purchases in a welcome sign for the struggling housing market. Most lenders have reduced their interest rates due to rising bond yields, which has increased borrowing costs for consumers. The decline in mortgage rates is also expected to boost demand for homes, particularly among first-time buyers who are hesitant to enter the market due to high prices.
This sudden increase in lending activity could lead to a surge in home sales and potentially alleviate pressure on housing inventory.
Will this boost in demand be enough to stabilize housing prices, or will it simply push them even higher?
Oil has regained some ground after plummeting to a 10-month low last week, as traders weighed weak Chinese data against signs that prices may have fallen too far. Crude prices are still down about 15% from their mid-January peak, but the recent dip seems to have found some support with sellers struggling to establish momentum below $70. The mood remains bearish, however, with speculators cutting net-bullish bets on global benchmark Brent by the most since July.
The resilience of oil prices in the face of weak Chinese data and escalating global tensions suggests that traders are becoming increasingly optimistic about a "buy-on-dip" market, where sellers struggle to push prices lower.
What implications will this trend have for the global economy, particularly if oil prices continue to recover and other commodity markets follow suit?
Homebuyers in the US canceled purchase contracts at a record pace in January, with about 14.3% of sales agreements falling through, up from 13.4% a year earlier and the highest level for the month in data going back to 2017. The high rate of cancellations casts a pall over prospects for the key spring sales season, which is just getting underway, as house hunters face an ever-growing list of pressures, including high mortgage rates and prices. Economic and political uncertainty, such as tariffs, layoffs, and federal policy changes, are among the factors contributing to an air of instability.
The surge in homebuyer cancellations may signal a broader shift in consumer behavior, with potential implications for the US housing market and the overall economy.
How will policymakers address the root causes of economic uncertainty, which appear to be affecting not just homebuyers but also broader segments of the population?
China’s consumer inflation has unexpectedly dropped below zero for the first time in 13 months, reflecting ongoing deflationary pressures within the economy, with the consumer price index declining by 0.7% year-on-year. This downturn is attributed to weak domestic demand, a decline in services prices, and a rare negative reading for core inflation, which fell by 0.1%. Analysts predict that a clearer picture of inflation trends will emerge in March as the effects of recent stimulus measures are assessed.
This development highlights the challenges faced by China's economy, particularly in sustaining consumer spending amid ongoing deflationary trends, which could have significant implications for economic policy moving forward.
What strategies could the Chinese government implement to combat deflation and stimulate consumer demand in the current economic climate?
Mainland Chinese investors snapped up an unprecedented amount of Hong Kong stocks on Monday, further boosting their holdings amid a tech-driven rally this year, and surpassing the previous record seen in early 2021. The inflows from Chinese buyers came as the Hang Seng China Enterprises Index slid 2.1% following a 5.9% rally last week, but are expected to continue driving market momentum. As the influence of mainland investors grows in Hong Kong's financial hub, concerns about geopolitical risks and market volatility for foreign investors may be offset by speculation over favorable policy toward the AI industry.
The increasing dominance of mainland investors in Hong Kong's stock market raises questions about the potential for a more fragmented and asymmetric global equity landscape.
How will the growing influence of state-backed investors shape the long-term trajectory of the Asian financial hub and its relations with the US?
Mortgage rates fell for a seventh consecutive week to the lowest level since December, according to mortgage buyer Freddie Mac, as the average rate on the 30-year fixed mortgage decreased to 6.63% from last week's reading of 6.76%, increasing prospective homebuyers' purchasing power and providing existing homeowners with an opportunity to refinance. The decline in rates is also expected to boost the housing market, which has been facing challenges due to rising interest rates in recent months. The current rate decrease may lead to increased demand for homes, potentially offsetting some of the negative impacts of higher mortgage rates.
The significant drop in mortgage rates could have far-reaching implications for the entire economy, particularly for industries that rely heavily on consumer spending and housing market activity.
How will policymakers respond to this trend, and are there concerns about the potential long-term effects of low interest rates on inflation and economic growth?
The Chinese government's focus on boosting consumption among young workers may lead to more sensible policies that can boost spending power over the long term, but deflationary risks mounting, officials are under pressure to deliver quick stimulus. Deciphering policy signals from the annual legislative session in Beijing is a daunting task, with every spring bringing around 5,000 senior lawmakers and political advisors gathering for a week to rubber-stamp the party's priorities. The government has lowered its annual inflation target to "around 2%" for 2025, the lowest figure since 2003.
This shift could signal a more nuanced approach to economic stimulus, one that acknowledges deflationary risks while still promoting consumption among young workers.
What role will private enterprise play in driving consumer spending in China's slowing economy, and how will policymakers balance support for businesses with their efforts to boost individual incomes?
U.S. construction spending unexpectedly fell in January, pulled down by a decline in outlays on multi-family homebuilding, with spending on private projects slipping 0.2% and investment in residential construction declining 0.4%, while outlays on new single-family projects rose 0.6%. Higher mortgage rates remain a constraint, exacerbated by looming additional tariffs on lumber and other imports, contributing to an excess supply of unsold houses on the market amid weak demand. The drop in spending is attributed to factors including higher mortgage rates and changes in government policies.
This decline may signal a slowdown in the construction industry, which could have significant implications for the overall economy and housing market.
Will increased tariffs on lumber and other imports further exacerbate the existing supply chain issues and worsen the already fragile state of the construction sector?