Caixin
Aug 17, 2021 06:34 PM
ECONOMY

Housing Price Growth Slows Across China as Curbs Kick In

The moderation in new-home prices widened in China in July, as just 51 cities reported month-on-month gains, the fewest since December and down from 55 in June. Photo: VCG
The moderation in new-home prices widened in China in July, as just 51 cities reported month-on-month gains, the fewest since December and down from 55 in June. Photo: VCG

China’s home price growth slowed further in July as the government stepped up efforts to cool the market.

New-house prices across China’s four first-tier cities — Beijing, Shanghai, Shenzhen and Guangzhou — rose 0.4% month-on-month in July, 0.3 of a percentage point slower than in June, the National Bureau of Statistics said Monday (link in Chinese), citing its latest monthly survey of property markets in 70 cities.

In the less affluent second-tier cities, such home prices rose 0.4% month-on-month, and in third-tier cities, 0.2%, both down by 0.1 of a percentage point.

Tightened government policies helped cool the market. Local governments announced 66 property-related measures in July, much more than the monthly average of 48 in the first half of the year, according to the Centaline property research center.

The moderation in new-home prices widened as just 51 cities reported month-on-month gains in July, the fewest since December and down from 55 in June.

Values in the existing home market in the first-tier cities rose 0.4% month-on-month in July, compared with 0.7% in June. Prices also climbed at a slower pace of 0.2% in second-tier cities, and fell 0.1% in third-tier cities, reversing a gain in June. Twenty-six cities posted price declines in July, compared with 16 in June, according to the statistics bureau.

The government’s measures showed more effect in the existing home market as banks further tightened mortgage policies for second-home buyers, said Xu Xiaole, an analyst at the Beike Research Institute.

Chinese regulators tightened lenders’ real estate exposure in December. The proportion of outstanding real estate loans in Chinese lender portfolios gradually declined from 28.7% in December to 27.4% in June (link in Chinese), according to a Soochow Securities Co. Ltd. (601555.SH) report dated July 25.

It also takes longer to process mortgage loans, sometimes as long as three to six months, while some banks don’t even have loan quotas left in certain regions, the report said.

In the first half of the year, many Chinese cities issued additional restrictions on home purchases to close policy loopholes. The country’s property curbs are expanding to the smaller, third- and fourth-tier cities, and more cities are included in the housing ministry’s monitoring list, according to Beike’s Xu.

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Contact editor Bob Simison (bobsimison@caixin.com)

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