Property price pull back
China’s real estate market cools as economy finds its feet
China’s red- hot property market has shown more signs of cooling down following a series of targeted measures, as the country’s economy grows on steady footing.
Milder price gains
Home prices in large and mediumsized cities ticked up again in October, but the pace of growth slowed since September, evidence of nascent effects resulting from recent tightening measures, experts said.
Breakdown figures showed that new home prices edged up 0.5 percent in first- tier cities such as Beijing, and 1.3 percent in large second- tier cities across China from September to October, the National Bureau of Statistics ( NBS) reported on Friday.
However, growth slowed by 2.8 percentage points in Beijing and 1 percentage point in the large secondtier cities over the period, data from NBS showed.
Prices of existing homes in firstand second- tier cities rose 0.6 percent and 0.8 percent over the same period, through growth slowed from September by 2.9 percentage points and 1.1 percentage points, respectively.
NBS senior statistician Liu Jianwei attributed the milder price gains to local government policies to restrain rising prices.
The data were released on the heels of a slew of measures to rein in speculative real estate purchases, check the risk of asset bubbles and stabilize the market.
Dozens of Chinese cities modi- fied home purchasing rules to make it harder to buy property, such as by raising the down payment requirements for some homebuyers.
In October, for instance, Beijing raised the down payment requirement for first- time buyers from 30 percent to 35 percent. People who want to purchase a second home now need to make a down payment of 50 percent of the purchase price.
In another example of stricter restrictions, the local government of Hefei, capital of East China’s Anhui Province, decreed in October that the price of any property must remain unchanged for six months after registration.
Recent tightening moves have effectively stopped prices from rising and prevented the market from growing out of control, said Liu Hongyu, a professor at Beijing- based Tsinghua University, adding that the long- term policy effects still need to be watched.
Sales of both new and existing homes declined at a faster pace in November, with the tightening moves starting to exert ripple effects in other cities that have not seen such moves, said Cheng Yun, a senior analyst at Centaline Property, a leading Chinese real estate agency.
The view was echoed by Xia Dan, a senior researcher at the Bank of Communications, who predicted that housing sales will further decelerate in November.
Firmer footing
Housing is an essential sector in most economies, including China’s, but the sector has also been the source of vulnerability, occasionally sparking financial crises in other economies.
The Chinese authorities are guarding against an unsustainable housing boom and facilitating reforms to channel resources into the real economy.
China’s economy is sustainable without fast expansion of the real estate sector, said Jiang Chao, a senior analyst at Shanghai- based Haitong Securities.
Despite the difficulty of transitioning to a more consumption and innovation- driven economy, a string of recent data pointed to the fact that the economy is on firm footing.
Some economists rejected worries that efforts to contain housing prices will cause the economy to lose momentum.
Policies to curb property bubbles may weigh on sectors related to the housing market around the second quarter of 2017, but the impact might be limited, noted Ren Zeping, chief economist at Beijing- based Founder Securities.
China’s industrial output expanded by 6.1 percent in October, largely due to strong performance in the hightech and equipment manufacturing sectors, NBS data showed on November 14.
It is the eighth consecutive month industrial output has exceeded 6 percent.
China’s service sector grew at its fastest pace in four months, braced by growing new orders, with the Caixin China General Services PMI ( Purchasing Managers’ Index) standing at 52.4 in October, according to Caixin on November 3.
Despite anemic foreign trade demand, China’s economy is stabilizing if judged from the perspective of company output, Jiang said, adding that the pace of China’s consumption growth has remained tepid in recent months.
The most important task for the Chinese economy is reform, including those reforms targeted at restructuring State- owned enterprises and improving growth quality, Jiang said.