China’s monthly house price data is out and it has a problem. The bubble is back and building. Monthly price increases rebounded to 1.3% and annual hit a new high of 9.2% after easing in the second derivative for months:
Prices gains accelerated across all city tiers:
64 cities out of 70 now have rising prices:
Advertisement
Anyone looking for another kick of the can in China is behind the curve. China needs to tighten. Expect more prudential measures soon (for what that’s worth!) or the words “hard landing” will be back in the vernacular very soon. The BIS is already there:
The build-up of excessive credit features prominently in discussions about financial crises.
While it is difficult to quantify “excessive credit” precisely, the credit-to-GDP gap captures this notion in a simple way.
Importantly from a policy perspective, large gaps have been found to be a reliable early warning indicator (EWI) of banking crises or severe distress.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
