Government Curbs Continue to Cool Home Price Growth in May

(Beijing) — After the government enacted a string of policies placing restrictions on housing purchases and lending, China saw a slowdown in the growth of property prices in May, data released Monday from the National Bureau of Statistics (NBS) showed.

Out of 70 cities surveyed, 29 saw slower increases in new-home prices in May compared with the previous month, including the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, and 11 of the 35 second-tier cities — provincial capitals, and industrial and travel hubs.

New-home price increases in first-tier cities have been slowing for eight consecutive months, and for six consecutive months in second-tier cities.

New-home prices dropped month-on-month in nine cities compared to eight cities in April, while existing-home prices fell in seven cities, two more than last month’s figure.

In first-tier cities, Beijing and Shanghai new-house prices both stopped climbing, while prices fell 0.6% in Shenzhen, the fastest pace in three months, according to statistics compiled by 5i5j, a leading property broker in China.

Notably, existing-home prices in Beijing saw a month-on-month decline of 0.9% in May, while other first-tier cities either remained stable or had moderate increases.

Meanwhile, prices of small existing properties in Beijing decreased more sharply compared to large and midsize homes, opposite the trend seen in other first-tier cities.

Beijing’s downward trend was the result of a set of new rules imposed by the municipal government to curb soaring property prices, said Hu Jinghui, vice chairman of 5i5j.

Housing prices began cooling after Beijing’s measures came into effect in March. As the policy’s effects continue, market expectations reversed completely, so the declining trend has spread from large houses to small and midsize properties, Hu said.

The capital city has imposed what analysts say are the stiffest property restrictions in the country, including raising down-payment and mortgage rates, and toughening homebuyer eligibility requirements.

In March, China’s Housing Ministry said the knowledge gained from Beijing’s experience is “worth learning” by other local governments.

Liu Jianwei, a senior statistician with the NBS, said the latest data showed that China’s city-based strategy in property policy-making has been effective.

At China’s top economic conference in December, the central government declared that “houses are for living in, not speculation.” Thereafter, a string of local governments enacted their own measures to curb such speculation and restrain soaring prices.

Contact reporter Song Shiqing (shiqingsong@caixin.com)