May 28, 2012
Hong Kong’s residential property market remains buoyant despite softening growth. The rate of increase in the HK Rating and Valuation Department house price index rebounded to 6.3% in March after eight consecutive months of slowing growth. Additionally, the results of the March survey from the Hong Kong Monetary Authority (HKMA) showed a significant pick up in the number of loan approvals (to 11,414 from 5,836) although they remain 34% below year ago levels. Arguably, all these signs point to the re-emergence of an overheating property sector. Indeed, the further prices climb above underlying fundamentals, the greater the risk of a severe correction. As such, the HKMA has recently indicated further tightening measures will be introduced if risks escalate.
French house building is likely to come under pressure in the near term
The monthly French housing starts data are highly volatile. As of 2011, house price growth has been slowing (from 8% to 4% presently). On this basis, we suspect the rate of house building is close to peaking and is likely to fall over the next year or so, in line with the trend in house prices.
US construction sector shows signs of life
Residential construction in the US grew at its fastest pace since 2010 according to Q1 2012 data released by the Bureau of Economic Analysis. Indeed, making a 0.4% contribution to economic growth in the first three months of the year, house building seems to be recovering from an almost five year slump.
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