China’s cooling measures curb new home price growth, property investment

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BEIJING — China’s new home costs elevated at their slowest tempo in a number of months as authorities stepped up efforts to rein in a red-hot property market, whereas cooling measures have been anticipated to restrict home price progress going ahead.

Average new home costs grew at their slowest tempo since December on a month-to-month foundation, and since January on an annual foundation, as authorities stepped up property curbs this yr, from capping banks’ lending to the sector to proscribing purchases.

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The property market’s sharp rebound from the COVID-19 shock final yr has raised issues about monetary dangers, however the array of tightening measures are taking a toll on the property sector, an important supply of Chinese financial progress.

China’s property market can also be grappling with widespread issues on the nation’s second-largest property developer China Evergrande Group, which is struggling to restructure a mountain of debt and keep away from a doable default.

Average new home costs in China’s 70 main cities grew 0.2% within the month of August after rising 0.3% in July, based on Reuters calculations primarily based on information launched by the National Bureau of Statistics (NBS).

China’s new home costs grew 4.2% in August from a yr in the past, versus a 4.6% improve in July.

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Authorities have stepped up measures to rein in China’s property market this yr, together with caps on banks’ lending to the sector, higher limits on builders’ debt ratios and restrictions on purchases. More than 20 cities strengthened their curbs on the sector in August.

The measures have slowed property purchases whereas some builders are being onerous hit by the liquidity squeeze.

New home costs in low-tier cities rose extra slowly than these in tier-one cities, however home costs in one among China’s greatest cities Guangzhou fell month-on-month for the primary time since March 2020.

“(The) property market has cooled significantly in the third quarter of this year,” mentioned Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.

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“The continuous tightening of credit policies and the decline in transaction volume have led to a clear slowdown in price growth.”

The NBS information confirmed 46 out of 70 cities reported month-on-month beneficial properties, down from 51 in July.

Property investment grew 0.3% year-on-year in August — its smallest progress in 18 months and down from a 1.4% improve in July, based on Reuters calculations primarily based on separate NBS information.

Nomura mentioned in word that ongoing property curbs have been unlikely to be eased within the close to time period, as Beijing has “attached national strategic importance to reining in property bubbles.”

“Housing price growth is expected to slow down in the future,” mentioned Zhang Dawei, chief analyst with property company Centaline.

“The number of cities seeing a slowdown in prices growth will increase.”

Earlier this month, rankings company Moody’s downgraded its outlook on China’s property sector to unfavorable from steady as a consequence of tighter entry to funding.

In an effort to ease housing woes of younger individuals, authorities have additionally elevated the availability of reasonably priced housing and moved to cap the price of home leases for the primary time.

(Reporting by Liangping Gao and Ryan Woo; Editing by Ana Nicolaci da Costa)

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In-depth reporting on the innovation financial system from The Logic, dropped at you in partnership with the Financial Post.

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