China’s August home price growth cools in top cities as property curbs bite
Home price growth lost steam in all major Chinese cities in August, an indication that Beijing’s efforts to stabilise housing costs are continuing to pay off.
Prices of new private homes rose in 46 out of 70 major cities tracked by the National Bureau of Statistics, down from 56 in July. Prices fell in 18 cities, compared to only 9 that reported declines a month ago. Prices were unchanged in six cities last month.
For the first time, all the 15 first- and second- tier cities closely monitored by NBS due to their skyrocketing home prices saw month-on-month prices that declined or were unchanged in August, compared to price drops in 10 cities and gains in five in July.
“Year-on-year growth of home prices continues to retreat in first- and second-tier cities, while it is starting to slow down in third-tier cities,” said Liu Jianwei, a senior NBS statistician. He added that in China’s four biggest cities, both the primary and secondary market has seen a contraction in price expansion for the 11 consecutive month as tough cooling measures take effect.
Among the four cities, home prices fell the most in Guangzhou and Shenzhen last month compared to July, down 0.7 per cent and 0.4 per cent respectively. Price growth was flat in Beijing and Shanghai.
One noticeable trend in August was that “price stabilisation spread to the lower-tier cities” as the average price growth declined for the second consecutive month, said Cindy Huang, director of corporate ratings at S&P Global Ratings.
“The spill over demand from bigger cities has been absorbed already, while on the other hand the market sentiment has been hit by nationwide credit tightening,” she said.
Chinese developers have benefited from robust sales in smaller cities, but that is not likely to happen in the next 12 months as the slow down will continue for a while, she added.
Haikou, a resort city in China’s southern Hainan province where there are abundant tourism properties, saw the biggest price adjustment last month, falling 1 per cent from July, while home prices in Guilin, a tourist city in Guangxi province, picked up the fastest with 1.1 per cent growth in August.
Adding to existing price controls and home purchase restrictions, Chinese authorities in August rolled out a raft of new policies to encourage the building of rental homes in major cities as part of efforts to ease the housing supply shortage.
Most recently, Shanghai authorities vowed to add 700,000 rental housing units by 2020, with Mayor Yingyong saying the city would persist with curbs to squeeze out property speculation and help ease the difficulties for youth and entrepreneurs wanting to stay in the city.