Data published last week showed that Chinese house prices have now fallen for 9 months in a row. It has been 13 months since the rate of house price inflation peaked. The US entered recession around 2 years after house price inflation peaked.
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China’s New Year celebrations took place last week. The event is a moveable feast, and can fall anywhere between 21 January and 20 February. As a consequence, most monthly measures of economic activity in China during the first two months of the year are combined and released in March. That means January is something of a black hole as far as the official statistics are concerned. What little data we do have, however, continue to support the view that a hard-landing in China is now in train. In particular, house prices have continued to fall.
Data published on last week showed that house prices have now fallen for nine months in a row – the longest run on record, under this relatively new measure. Mudanjiang, one of the 67 Chinese cities that registered house prices falls over the past twelve months for second-hand residential buildings, experienced a 13.9% fall. The US entered recession around two years after house price inflation had peaked. After nine months of recession, Lehman Brothers collapsed. As our chart illustrates, house price inflation in China has slowed from its peak in January 2014 at least as rapidly as it did in the US.
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