China home prices edge up
But rise in December below hike seen in 2016 as curbs took effect
BEIJING: China’s housing market picked up slightly in December as mild declines in bigger metropolises stabilised and smaller cities gained some momentum, but price growth more than halved in 2017 as government curbs on speculation took effect.
New home prices in December rose 5.3% from a year earlier, up from November’s 5.1% increase, but well off the 12.4% growth seen in 2016 as the government worked to engineer a soft landing for the soaring housing market.
Average new home prices in China’s 70 major cities rose 0.4% in December from the previous month, reaching a modest fivemonth high after growth stabilised for two consecutive months, Reuters calculated from National Bureau of Statistics (NBS) data yesterday.
The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes. Fifty-seven cities reported higher prices in December, up from November’s 50.
Slightly higher prices outside the major cities could be due to an increase in supply as property developers chased sales targets towards year-end, despite government price caps, property analysts said.
“A shift in government monetary and financial policies has put more liquidity pressure on some developers. It’s also becoming clearer to them that the tightening measures will remain for longer than expected,” said Joe Zhou, head of research for JLL China, a property services firm.
Property sales by floor area quickened to a six-month high in December, with growth picking up to 6.1% from a year earlier, Reuters calculated from a separate official release from the NBS yesterday.
Total sales grew 7.7% in the fullyear of 2017, falling sharply from the 22.5% increase in 2016.
China’s housing market has soared over the past two years, prompting more than 100 cities to impose measures to curtail speculative buying, with Chinese President Xi Jinping reiterating that “houses are built to be lived in, not for speculation”.
A softening but still resilient property market, underpinned by steady prices, would please policymakers.
They are keen to keep the market – still a vital source of growth for the economy – stable as they campaign to reduce debt and financial risk nationwide.
Monthly price rises peaked in September 2016 at 2.1% nationwide, but they have since softened only slowly as fear of missing out spooked would-be buyers.
As mega-cities such as Beijing and Shanghai imposed increasingly stringent measures, speculators moved to smaller centres where authorities offered cheap credit and imposed few restrictions in the hope of clearing a glut of unsold homes.
Property prices in China’s tier-2 cities, mostly sizable provincial capitals, recorded the strongest growth in December.
They rose 0.6% versus a 0.5% increase in November, the NBS said. Tier-3 cities rose 0.5% against a 0.4% gain in November.
With official tightening measures widely expected to remain in place, market watchers do not anticipate significant price fluctuations in the year ahead.
The overall market is also cushioned by falling inventory, which dropped 15.3% in 2017, according to the NBS.
“We expect an opposite trend in the year ahead from last year – smaller tier-3 and tier-4 cities will cool quickly and more housing supply will go into bigger cities where demand will catch up,” said JLL’s Zhou.
China’s housing minister said in December authorities would facilitate property purchases by firsttime homebuyers and those wanting to improve their living conditions in 2018, signalling policies would continue to accommodate what Beijing deems as “rigid”, non-speculative, demand.
A slowdown in sales has started to drag on real estate investment towards the year-end, however. Real estate investment growth eased to 2.4% in December, the lowest since July 2016, according to Reuters calculations.
It still rose 7% in 2017, marking the best annual growth since 2014, giving the economy a major boost in the past year.
The world’s second-largest economy grew an annual 6.9% in 2017, topping the government’s target and quickening from 2016 growth of 6.7%. — Reuters