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November 19, 2016

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Home » Business » Real Estate

Housing markets cool as new restraints kick in to avoid bubble

PROPERTY markets of China’s first and second-tier cities saw confirmed signs of a cooling last month, with a notable slowdown in price growth for both new and pre-owned homes after authorities acted to head off a property bubble, the National Bureau of Statistics said yesterday.

Average new home prices in October rose 0.5 percent from a month earlier in first-tier cities and 1.3 percent in second-tier cities, compared with 3.3 percent and 2.3 percent in September, according to the bureau, which tracks housing prices in new and pre-owned markets across 70 cities.

In the existing homes market, prices climbed an average 0.6 percent compared with 3.5 percent in September in first-tier markets, and 0.8 percent in second-tier markets, down from 2.9 percent.

“Residential markets in both first and second-tier cities cooled down in October while third-tier ones remained rather stable,” said Liu Jianwei, the bureau’s senior statistician. “On a year-on-year basis, price growth in first and second-tier cities also increased at a slower pace.”

Since late September, 22 cities across the country have introduced restrictions, including limits on the number of properties people could buy and increases in the down payment required, in a bid to combat soaring prices which could harm overall economic development.

“A shift in government policy led to the latest turnaround in the housing market, which we believe should last for at least six to nine months,” Centaline Property, a major realty chain, said in a research note yesterday.

“In general, home prices in cities where further rein-in measures have been implemented lately could possibly see a drop of more than 10 percent.”

Buying sentiment in the 22 cities that have tightened rules plunged about 40 percent on average in October from a month earlier, according to the Centaline note.

Last month, Shenzhen was the only one of the four gateway cities that saw prices actually fall — down 0.5 percent for new and existing properties compared with September gains of 1.9 percent and 1.8 percent.

The other gateway cities — Beijing, Shanghai and Guangzhou — all registered slower growth of 0.3 percent, 0.2 percent and 0.8 percent, respectively.

This compared with gains of 4.9 percent, 3.2 percent and 3.1 percent in September.

New homes worth 941.2 billion yuan (US$137 billion) were sold across the country last month, down from 1.15 trillion yuan in September.


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