Gains in China’s home prices slow in February

Gains in China’s home prices moderated in February, two private surveys showed on Saturday, in the latest signs of a cooling down in the country’s frothy property market as government curbs appear to be biting.

Prices of new homes in 288 major cities in February rose 9.08 per cent in February from a year earlier, easing from January’s annual rise of 9.39 per cent, a poll by real estate services firm E-House China showed.

That was the slowest gain in 10 months, marking the fourth consecutive month of easing annual gains.

A separate survey by the China Real Estate Index System(CREIS) also showed average prices in 100 biggest cities rose 0.54 per cent in February from January’s 0.63 per cent rise, to post a 21st straight month gain.

On average, prices rose 10.8 per cent in February from a year earlier, CREIS said in a statement, moderating from 11.1 per cent annual gains in January and marking the second consecutive month of easing annual gains.

The latest surveys added to signs of a cooling down in the property market, fanning fears of a slowdown in the economy.

“Against the backdrop of slowing economic growth and no obvious signs of loosen credit environment, the residential market has cooled down a little in the slack season,” said CREIS, a consultancy linked to China’s largest online property information firm, Soufun Holdings.

China’s property market has shown initial signs of losing steam since late last year as local governments took further tightening measures and banks gradually tightened lending to this sector.

Official data showed China’s home price gains eased for the first time in 14 months in January as some property developers have been stepping up the use of sales promotions for some suburban housing projects.

A Reuters poll of 13 industry watchers this week showed the chance of a sharp drop in China’s property market was slim, although some smaller cities may see a correction of up to 10 per cent.

China’s central government did not introduce any nationwide property curbs since the new leadership formally took office in March last year, but local authorities in some areas have taken targeted steps to try to cool prices, including raising minimum down payments for second homes and promising more land for building.

Still home prices are at record highs and well beyond the reach of ordinary Chinese in most cities as the unrelenting rise has been buoyed by a view that property remains one of the best investments.

China’s statistical bureau is due to publish official home prices data for 70 major cities for February on March.18.