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Analysts at Nomura note that the simple average of property price inflation across 70 cities of China grew further in July, up 0.1 percentage points (pp) to 1.2% m-o-m. 65 cities had sequentially higher prices in July, from 63 in June, and five had lower or flat prices, from seven in June.

Key Quotes

“Property price inflation in Tier-1 cities edged down to 0.3% m-o-m from 0.6% in June.”

“The rise in 70-city property prices in July was driven by home price inflation in low-tier cities which rose further, by 0.2pp, to 1.3% m-o-m, supported by the Shantytown Renovation Program backed by pledged supplementary lending.”

“Support from the PSL did not only boost home prices in low-tier cities, but also drove higher property sales in them, as property sales volume growth spiked 5.4pp to 9.9% y-o-y in July. However, we remain cautious on the sector’s outlook, given the constraints on home purchases from policy tightening, high prices and high household debt.”