Prices of China’s new homes grow at the weakest pace in eight months as purchase curbs bite hard amid a slowing economy

18-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Prices of China’s new homes grew at the slowest pace in eight months in December, as the government’s curbs on speculation dampened sentiments amid a slowing economy, their impact particularly hard-felt in the country’s smaller cities.

The prices of new homes rose by 0.77 per cent last month across 70 cities monitored by the government, according to Bloomberg’s calculation of data released by the National Bureau of Statistics. This was slower than the 0.98-per cent gain in November, and was the slowest clip since April 2018.

“The continuous slowdown in prices suggests that some developers are cutting the prices of newly launched projects to boost end of the year sales,” said Yan Yuejin, research director at E-House China R&D Institute.

The weak price data vindicates a gradual move by the central government to give provincial and local authorities the discretion to roll back some of their property curbs to prop up the economy. At least three cities Guangzhou, Zhuhai and Heze in Shandong province have already begun to relax some of their curbs.

The prices of new homes rose in 59 of the 70 cities being monitored last month, compared with 63 in November, and 65 in October. The slowdown was most prominent in so-called second-tier and third-tier cities, whose monthly increases slowed to the weakest since August.

Prices rebounded in the first-tier cities the provincial capitals and megacities like Beijing, Shanghai and Guangzhou with month-on-month gains at 1.25 per cent in December, compared with 0.71 per cent in the second-tier and 0.77 per cent in the third-tier cities.

Beijing’s new-home prices increased by 1 per cent last month, the strongest increment since September 2016, while Guangzhou recorded the biggest monthly gain across 70 cities with a 3 per cent rise last month.

“We expect home prices in tier one and two cities to be flat over the next two years while tier three cities will experience a moderate decline of 5 per cent a year as home purchase and reselling constraints remain in place,” Fitch Ratings said in a report.


Category: China

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