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China鈥檚 housing prices seen to stabilize as restrictions continue
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CHINA’S tightened regulations on the property market to rein in skyrocketing home prices began to pay off as home prices in major cities continued to stabilize.
Of the 70 large and medium-sized cities surveyed, 24 saw prices rise slower year on year in March, up from 20 in February, the National Bureau of Statistics said yesterday.
The average new home prices rose slower year on year in all 15 first-tier and large second-tier cities. Their price hikes were between 0.2 and 0.6 percentage points slower than those in February.
On a monthly basis, prices in six of the 15 cities decline from February, while another six saw price hikes of below 0.5 percent, the bureau said.
“March is traditionally a hot sales season, but new home prices in 15 first and second-tier cities rose slower year on year under targeted and differentiated measures to curb home prices in various cities,” said Liu Jianwei, the bureau’s senior statistician.
New home prices in Beijing rose 0.4 percent month on month in March, while Shanghai’s fell 0.1 percent and Shenzhen’s slid 0.3 percent.
Property sales recorded strong growth in 2016 with an annual gain of 22.5 percent, thanks to two years of policy easing, starting with relaxation of purchase restrictions in 2014 and fueled by pro-growth policies, including interest-rate cuts.
Since October, the Chinese government has implemented a slew of measures to cool runaway housing prices, including restrictions on home purchases and increased minimum down payment requirements.
The property market, however, picked up pace in February after price gains slowed in previous months, which has led to the biggest wave of tightening of home purchase and lending rules since mid-March.
Dozens of Chinese cities have implemented tougher cooling measures to limit price gains since mid-March, following Beijing’s unprecedented harsh curbs that lifted the down payment ratio for second homes to 60 percent.
Meanwhile, China’s central bank has also urged banks to strengthen mortgage risk management and crack down on market irregularities such as fake divorces to skirt high down payment requirements.
Even against the backdrop of such severe housing regulations, home prices in some cities still recorded higher growth in March, showing that the country’s housing regulation still has a long way to go, said Xia Dan, a senior researcher at the Bank of Communications.
“Controlling measures on home prices will remain as long as price hikes continue,” Xia said.
“Cities with fast price increases will likely see more tightening measures being implemented, and the key targets may be pre-occupied homes.”
Speaking at a press conference on Monday, statistics bureau spokesman Mao Shengyong admitted that the influence of China’s property controls will gradually become evident in April and the following months as they were only introduced in mid-March.
He emphasized that the government will take more category-based and targeted steps to regulate the real estate market to make sure that “houses are for living in, not for speculating with.”
For the years ahead, China will build a market-oriented and long-term mechanism to curtail a property bubble and prevent big market fluctuations, said Mao.
Liu Hongyu, head of the real estate research institute of Tsinghua University, agreed, noting that a long-term mechanism, featuring increased land supply and a sound housing finance system, real estate tax system and urbanization infrastructure construction, should be established to ensure stable and healthy development of the real estate market.
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