New home prices in China continue to slow in September vindicating Xi Jinping’s stance on curbing speculation
Prices in 15 big cities, including Beijing and Shanghai, monitored by National Bureau of Statistics, fell or were flat in September
Growth in new home prices in China slowed in September for the sixth consecutive month, vindicating President Xi Jinping’s call for reining in speculative buying.
Fewer cities registered month on month price rises in September, as only 44 out of the 70 cities monitored by the government posted sequential growth, compared with 46 in August, according to National Bureau of Statistics. Prices in 18 cities declined over the previous month, the same as August.
All 15 big cities monitored closely by NBS showed declining or flat prices compared with the previous month. Prices in Beijing declined 0.2 per cent over August, while in Shanghai they fell 0.1 per cent.
Transactions also cooled along with retreating prices. Home sales in September fell from year-earlier levels for the first time since March 2015, declining 5.7 per cent, compared with 2.3 per cent growth in August, according to the Post’s calculation based on NBS data.
New housing starts also slowed sharply, from 7.6 per cent year on year growth till August to 6.8 per cent till September.
“Policy tightening effects continued to impact 15 focus cities,” said Carol Liao, senior China economist with JPMorgan. “Price momentum in lower tier cities has eased as well.”
The bank calculated that house prices on average rose 0.2 per cent month on month in September, the same as in August. Year on year price increased by 6.5 per cent in September, but the pace of growth has been slowing for the last nine consecutive months.
The price growth slowdown is a vindication for President Xi, who reiterated in the opening speech at the 19th party congress that“houses are built to be inhabited, not for speculation”.
There were also signs of heightened scrutiny on any talks regarding real estate tightening. Officials in northwestern Ningxia province quickly moved to quash rumours circulating on the internet of a possible property tax over the weekend. Ningxia government clarified no new tax was being imposed.
Wang Menghui, China’s housing minister said in a press conference on Sunday that the ministry “will not waver in or ease its efforts to control the property market”, and “ensure the continuity of the current housing policies.”
An official with China Banking Regulatory Commission vowed earlier to crack down on the use of consumer loans as down payment for property investments.
As the availability of bank mortgage tightens in China, investors are increasingly turning to short-term consumer loans, usually reserved for buying cars or overseas travel. The amount of “irregular” consumer loans taken out since March has reached 370 billion yuan (US$56.18 billion), with at least 80 per cent going towards property payments, E-House China R&D Institute estimated.