22 February 2013
Asia Chart Alert: China: Property prices rose faster in January
This should further pressure the government to tighten monetary and property market policies.
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| Fig. 1: Property price growth and M2 growth |
· In January, the average property price in 70 cities rose by 0.63%, its first year-on-year increase in eleven months, according to the National Bureau of Statistics. On a month-on-month basis, it rose by 0.54%, the fastest growth since January 2011.
· We think loose monetary policies and abundant liquidity were the primary drivers of the recent property price increases. M2 growth bottomed in April 2012 and rose to 15.9% y-o-y in January. Total social financing reached a historical high of RMB2.5trn in January.
· We believe the recent rise in property prices will pressure the government to tighten policies. Indeed, the State Council announced five measures to cool the property market on Wednesday. We believe authorities will soon tighten monetary policies to control risks and continue to expect growth to slow from 8.1% in H1 to 7.3% in H2, mainly due to policy tightening.
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