HONG KONG, Dec. 14, 2010 /PRNewswire-Asia/ -- Business surveys continue to point to strengthening activity with both the HSBC and NBS PMI manufacturing surveys showing increases in November, picking up to 55.3 and 55.2 respectively (where any reading greater than 50 marks expansion). These positive results are indicative of continued strength in the economy, giving an upward bias to interest rates.
Rising inflation expectations to keep Indian central bank on guard
Two key events take place in India this week critical to the outlook for the property sector. The latest inflation data for November is released today, whilst on Thursday 16th the Reserve Bank of India (RBI) holds it's monthly meeting. There is a chance that the authorities will take this opportunity to raise interest rates again as policymakers try to get ahead of the curve and pull inflation expectations back into line.
US house building activity continues to struggle
With housing starts at such depressed levels, it comes as no surprise that the NAHB index came in at just 16 for November (a reading above 50 indicates that more builders view sales conditions as good rather than poor). The index has not been above 50 since April 2006. The soft tone to the property market was further demonstrated this week with the publication of the Case-Shiller Index. On the 20-city measure, house prices declined 0.8% on the month.
Monetary policy and house prices; what do the Swedes think?
Policy has been tightened by 75 basis points to 1% since July, primarily due to the strength of economic recovery. However, there is a growing sense that recent house price developments have permeated monetary policy of late. This is unsurprising given that house prices have been rising since Q2 2009 and are now 8.2% above their last peak (Q3 2008).
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