Prices of new homes in China grow at slowest pace in 17 months

New residential flats in Shenzhen, near the Hong Kong-Shenzhen border. December's 6.6 per cent price growth was the slowest pace since July 2018, and significantly weaker than the 9.7 per cent gain seen in December 2018.
Dated: 17-Jan-2020

China's new home prices grew at their weakest pace in 17 months in December, with broader curbs on the sector continuing to cool the market in a further blow to the sputtering economy.

Average prices of new homes in China's 70 major cities rose 6.6 per cent last month from a year ago, slowing from a 7.1 per cent gain in the previous month, according to Reuters calculation based on National Bureau of Statistics (NBS) data yesterday.

It was the slowest pace since July 2018, and significantly weaker than the 9.7 per cent gain seen in December 2018.

Price trends have been mixed as the authorities try to reduce frothiness in some cities and relax rules in others in an effort to foster stability in a sector seen as a pillar of the world's second-biggest economy.

Many analysts are forecasting a further slowdown in the market.

"The market has hit a turning point, "said Mr Zhang Dawei, a Beijing-based analyst with property agency Centaline. He said the NBS data did not fully reflect the downturn in some markets, including in the capital Beijing, where inventory is at a multi-year high.

"In a downward cycle, most cities' government-mandated price caps on new launches have been lifted, and that would mean even as overall demand has cooled, prices would still somehow show stronger growth on paper, "he said.

All the same, home prices still marked the 56th straight month of gains, even amid China's clampdown on property speculation since 2016 to stop home prices from overheating. With the pace of economic growth slowing, policymakers are keen to avoid wholesale squashing of the property market.

There have been some signs of improvement in demand and prices across the sector since late last year as trade tensions with the US eased.

Most of the 70 cities surveyed by the NBS still reported monthly price increases for new homes, with the number up to 50 from 44 in November in a sign of some broadening strength in the market.

"It suggests property developers' year-end sales may have not been that bad at all after running persistent promotion campaigns, "said E-house China Research and Development Institution director Yan Yuejin in Shanghai.

On a month-on-month basis, home prices edged up 0.3 per cent in December from the previous month, unchanged from the pace in November.

Source: Straits Times