Chart of the Day: Housing Market Slows Amid Tightened Regulations
Existing-home prices in both China’s first- and second-tier cities rose at a slower pace in May, official data show, indicating that tighter government controls have arrested a rebound in local property markets.
The average price of existing homes in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen rose 0.1% month-on-month in May, slower than a 0.4% increase in the previous month and ending a run of three consecutive months of accelerating growth, according to data (link in Chinese) released Tuesday by the National Bureau of Statistics (NBS).
The average existing-home price in 31 second-tier cities surveyed by the NBS rose 0.5% month-on-month in May, slower than April’s 0.6% growth and March’s 1.2% increase — yet still up from a 0.2% decline in February.
Existing-home prices usually better reflect market conditions in big cities as new-home prices and sales are subject to tighter regulation and greater government intervention.
The situation in new-home prices was similar. The average price of new homes in the four biggest cities rose 0.3% month-on-month in May, down from April’s 0.6% growth, yet up from March’s 0.2% increase. Meanwhile, the average price of a new home in second-tier cities rose 0.8% month-on-month in May, unchanged from April and up from March’s 0.6%.
Continuous regulatory tightening in May weighed on potential homebuyers’ sentiment, Zhang Dawei, chief analyst with a research center under the Hong Kong-based Centaline Property Agency Ltd., said in a note.
The stepped-up regulations came in the wake of a short-lived recovery in property markets.
Amid an economic slowdown, local governments and developers had held high hopes for loosening restrictions on the real estate sector, a key pillar of domestic demand. Yet as usual, the central government needed to calm widespread complaints about soaring house prices, crack down on speculation and stay alert about a property bubble that could trigger turmoil in the financial sector.
In April and May, the Ministry of Housing and Urban-Rural Development issued warnings to 10 cities about their rapidly rising home or land prices — including Foshan, a southern manufacturing hub in wealthy Guangdong province, and Dalian, a port city in the northeastern rustbelt province of Liaoning, the official Xinhua News Agency reported (link in Chinese).
Niu Mujiangqu contributed to this report.
Contact reporter Lin Jinbing (firstname.lastname@example.org)
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