China's housing curbs begin to bite
Amid tighter lending, new-home prices rise 0.49pc in big cities, with developer discounts
Langi Chiang and Jane Cai
The mainland's housing inflation eased last month, as banks tightened rules on property loans, forcing some developers to cut prices in the latest sign that government measures have started to take some heat out of the market.
Average new home prices across the mainland's 70 biggest cities rose 0.49 per cent, down from December's increase of 0.51 per cent, the National Bureau of Statistics announced yesterday.
Six cities suffered falls in prices - Hangzhou, Wenzhou, Harbin, Baotou, Jining and Shaoguan. In December, prices dropped only in Wenzhou and Shaoguan.
"China's property market is showing signs of stabilisation," said Xu Weibin, a China leader at EC Harris, a global consultancy for building and property assets.
He also said government measures were helping to cool the housing market and avert the risk of a bubble.
Liu Jianwei, a senior statistician at the bureau, said in a statement that "factors such as tighter credit and moderating inventory pressure pushed down transactions and eased housing inflation in some cities".
Lending to the property sector was already unusually tight at the beginning of this year, a stark contrast to banks' past practice of rushing out loan approvals in the new year after fresh credit quotas had been approved.
Industrial Bank suspended its mezzanine and supply chain financing to the real estate sector, but the new policy would not affect mortgage loans, a source at the medium-sized bank said.
Bank officials were not available for comment.
Bank of Communications, the mainland's fifth-largest lender, started to charge first-home buyers mortgage rates 5 per cent higher than the benchmark on February 14, although regulators allowed a discount of as much as 15 per cent, a client manager in Beijing told the South China Morning Post.
An officer at the bank dismissed market talk the bank had stopped all kinds of loans to the real estate sector, but declined to comment further.
At the weekend, discounts of 20 to 25 per cent at housing projects in Hangzhou, the capital of Zhejiang province, and in Changzhou, in Jiangsu province, were offered to speed up sales.
"This will likely aggravate investor concerns on both the liquidity situation for developers and property sales prospects and thus continue to weigh down on share prices," Barclays property analysts Alvin Wong and Jianping Chen said in a report published yesterday.
But they added that since valuations "only [imply] a 10 to 13 per cent downside and the balance sheets for developers have improved, the downside potential will be limited".
The Shanghai stock exchange's property index yesterday fell more than 5 per cent to end at an eight-month low.
Eight of the 10 worst performers in the Hong Kong share market yesterday were mainland property stocks, led by Hangzhou developer Greentown China. It dropped 9.26 per cent to finish at HK$10.58, after a session low of HK$10.42.
Home prices kept rising in year-on-year terms last month, albeit at a slower pace, the statistics bureau said.
In major cities, annual housing inflation eased to multi-month lows. Prices rose 18.8 per cent in Beijing, 20.9 per cent in Shanghai, 18.9 per cent in Guangzhou and 18.2 per cent in Shenzhen, down from December's increases of 20.6 per cent, 21.9 per cent, 20.4 per cent and 20.3 per cent, respectively.