HONG KONG, Sept. 24 /PRNewswire-Asia/ -- Looking ahead, the full impact of tighter controls on mortgage lending is likely to take time to feed through into loan approvals data which tend to lead price developments. As such, it is unlikely to dull the lending and pricing data too much in the near term. Moreover the strong Q2 GDP release, which exceeded market expectations by posting 6.5% annual growth, could fuel further rises in the number of employed persons.
Japanese housing construction yet to see sustained recovery
In the residential property sector, construction activity remains sluggish. Housing starts in Japan have yet to witness a sustained recovery, having fallen off substantially since the autumn of 2008. Indeed, over the last 18 months housing starts have averaged only 65,000 units per month, which compares to a monthly average of 91,000 units during 2008. Furthermore, the recovery in construction orders appears to be fading. Growth in annual construction orders has eased back since the summer with the annual rate of change slipping into negative territory in July.
US construction sector down but not out
Total construction spending during July was 1.8% below the June reading (and 11.8% below year ago levels). This marks the third consecutive month of declines, with residential construction spending in particular feeling the brunt of weak market conditions. Indeed, after the expiration of the homebuyer tax credits, residential construction has fallen 10% from April to July and remains 65% below its peak in January 2006.
Outlook for euro area mortgage lending turns bleaker
Looking forward, given the deterioration in the wider macro backdrop, the pace of mortgage lending at the euro area level is likely to slow over the next twelve months. Indeed, the latest EuroCOIN reading -- which provides a real time estimate of euro area economic growth over the latest three months -- fell to 0.37% in August. This suggests the rate of economic growth in Q2 (1% q/q) is unlikely to be sustained.
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