China: Housing activity index stays subdued — Time-inconsistency issues with the late August reform

JPM's housing activity index remained subdued, with elevated contraction across major indicators and a downtick in August. The contraction in major housing activity indicators widened, including residential floor space starts, sales and developers' funding sources. The decline in NBS 70-city home prices seems to have stabilized, with tier-1 city prices continuing to outperform, led by Shanghai and Shenzhen, while Beijing lagged; new-home prices are still well below their 2021 peak and secondary home prices have fallen sharply. China's property adjustment is entering a more decisive phase. Despite years of deleveraging, property remains a major drag on economic growth, exposing the time-inconsistency problem in China's housing strategy: reforms that reduce leverage, improve affordability and strengthen financial stability have also weighed on investment, land sales, fiscal revenues and overall growth;