Housing markets in major Chinese cities cool as measures effective

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October 22, 2016

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Housing markets in major Chinese cities cool as measures effective

By Cherry Cao | October 22, 2016, Saturday |

Print Edition

HOUSING markets in China’s first and selected second-tier cities are showing signs of cooling because of the effective implementation of the latest measures by local governments to curb speculation.

The pace of the growth in new home prices in 15 major cities, including Shanghai, Beijing, Guangzhou and Shenzhen, slowed notably, or even fell, in the first half of October compared with September, the National Bureau of Statistics, which tracks housing prices in new and pre-owned markets across 70 cities, said yesterday.

Of the 15 cities, new home prices in Wuxi, Beijing, Hefei and Zhengzhou rose 4.4 percent, 1.2 percent, 1 percent and 4.3 percent, respectively, in the first half of this month from the same period a month earlier. But their gains slowed notably from their monthly growth of 8.2 percent, 4.9 percent, 4.6 percent and 7.6 percent in September.

In Shanghai, home prices went up 0.7 percent for the first half of October, moderating from the 3.2 percent gain seen in September.

“We have seen positive changes recently in the country’s first and selected second-tier cities following a new round of targeted measures by local governments to cool their overheated property markets,” said Liu Jianwei, the bureau’s senior statistician. “In particular, Shenzhen and Chengdu both saw their prices fall by 0.3 percent and 0.1 percent while the pace of growth slowed ranging from 1 to 3.8 percentage points in the remaining 13 cities.”

Local governments across the country have tightened measures over the past few months by either limiting the number of homes people are eligible to buy or raising the down payment as rising home prices could create a property bubble threatening the country’s economy. Since September, more than 20 cities have unveiled new policies to combat soaring home prices.

As the pace of price rises slowed, buying sentiment has also been curbed effectively, the bureau said.

Transactions of new homes in most of the first and selected second-tier cities declined significantly in the first half of October from the same period a month ago. Four cities suffered a month-on-month plunge of between 60 percent and 80 percent and three cities posted a decline of between 40 percent and 60 percent, according to the bureau.

In the short term, the biggest unknown remains the effect the government’s efforts to curb home prices will have on economic growth, as the property sector affects industries ranging from construction and cement to furniture.

As overall property market sentiment and demand were strong before recent tightening measures took effect, sales growth is expected to decelerate but not contract in the next couple of months, UBS China economist Wang Tao noted.

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Housing markets in major Chinese cities cool as measures effective

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