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June 20, 2017

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Housing boom cooling on tough controls

FIFTEEN Chinese cities where the strictest measures to curb speculation have been imposed registered slower year-on-year growth in new home prices for another month in May, evidence that the country’s hottest property markets continued to stabilize.

The 15 cities, including Shanghai, saw year-on-year price growth decelerating 0.5-6.4 percentage points compared with April, the National Bureau of Statistics said yesterday.

On a month-on-month basis, six cities recorded new home price gains, unchanged from April.

“Around the country, first and second-tier cities registered the most notable retreats in price growth in both new and existing markets,” said Liu Jianwei, a senior statistician at the bureau, which monitors prices in new and pre-owned home markets in 70 major cities.

“For instance, in the four first-tier cities, year-on-year price growth of new and pre-owned houses both fell for the eighth consecutive month in May.”

In second-tier cities, year-on-year price growth of new homes dropped for the sixth straight month in May and price growth of existing homes declined for the fourth consecutive month, the bureau’s data showed.

Among the 70 cities, 29 recorded slower year-on-year new home price increase in May, compared with 30 cities in April. In the pre-owned home market, 18 cities registered slower year-on-year price rises.

On a month-on-month basis, 26 cities registered slower new home price growth, an increase of three from April. In the pre-occupied housing market, 30 cities recorded slower growth, a rise of eight from a month ago.

In Shanghai, new home prices remained unchanged from April and gained 12.9 percent from the same period of last year, the bureau said.

Given the tougher cooling measures, analysts predicted home prices will continue to cool in coming months and there will be more intensified policies due to price rises in some third-tier cities.

Xia Dan, a senior researcher at the Bank of Communications, predicted prices in previously red-hot markets like Beijing would continue easing.

More home purchase restrictions and the tightened monetary environment will weigh on market demand in the short term, resulting in lower prices and shrinking sales, said Xia.

Purchase restriction policies will expand to third-tier and fourth-tier cities to cope with the recent price rallies there, said Zhang Dawei, a senior Centaline analyst.

A monthly report released by the Chinese Academy of Social Sciences in early June also predicted the downward trend of home prices in the second half of the year. But in the long term, limited land and environmental capacity will restrict housing supply in big cities and threaten to push prices higher, the report said.


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