China's authorities have achieved their goal to arrest new home price increases that were forming a speculative bubble. In spite of brisk home sales, the rapid price appreciations prevalent in prior years have stopped.
People's Daily: New home prices ceased growing in most of 70 major Chinese cities in February, the National Bureau of Statistics (NBS) said Sunday...
On a year-on-year basis, 27 cities saw new home price declines in February, up from 15 in January, the NBS said.
|Month over month % change in new residential property values across major cities (source: NBS)|
With housing prices supposedly under control, various stimulus projects can start being implemented. The currency appreciation program has stopped (to great joy of China's exporters) and PBoC will start targeting M2 (the target growth is 14%).
As far as further housing declines, the Chinese authorities will likely welcome additional controlled deflation in this sector accompanied by some consolidation among the numerous (often financially strained) property development firms. Risks of a default in the property development sector remain high.