China’s cooling measures curb new home price growth, property investment

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BEIJING — China’s new house costs elevated at their slowest tempo in a number of months as authorities stepped up efforts to rein in a red-hot property market, whereas cooling measures have been anticipated to restrict house worth progress going ahead.

Common new house costs grew at their slowest tempo since December on a month-to-month foundation, and since January on an annual foundation, as authorities stepped up property curbs this yr, from capping banks’ lending to the sector to limiting purchases.

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The property market’s sharp rebound from the COVID-19 shock final yr has raised issues about monetary dangers, however the array of tightening measures are taking a toll on the property sector, an important supply of Chinese language financial progress.

China’s property market can be grappling with widespread issues on the nation’s second-largest property developer China Evergrande Group, which is struggling to restructure a mountain of debt and keep away from a attainable default.

Common new house costs in China’s 70 main cities grew 0.2% within the month of August after rising 0.3% in July, based on Reuters calculations primarily based on information launched by the Nationwide Bureau of Statistics (NBS).

China’s new house costs grew 4.2% in August from a yr in the past, versus a 4.6% enhance in July.

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Authorities have stepped up measures to rein in China’s property market this yr, together with caps on banks’ lending to the sector, higher limits on builders’ debt ratios and restrictions on purchases. Greater than 20 cities strengthened their curbs on the sector in August.

The measures have slowed property purchases whereas some builders are being arduous hit by the liquidity squeeze.

New house costs in low-tier cities rose extra slowly than these in tier-one cities, however house costs in one in every of China’s greatest cities Guangzhou fell month-on-month for the primary time since March 2020.

“(The) property market has cooled considerably within the third quarter of this yr,” mentioned Yan Yuejin, director of the Shanghai-based E-house China Analysis and Growth Establishment.

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“The continual tightening of credit score insurance policies and the decline in transaction quantity have led to a transparent slowdown in worth progress.”

The NBS information confirmed 46 out of 70 cities reported month-on-month features, down from 51 in July.

Property funding grew 0.3% year-on-year in August — its smallest progress in 18 months and down from a 1.4% enhance in July, based on Reuters calculations primarily based on separate NBS information.

Nomura mentioned in notice that ongoing property curbs have been unlikely to be eased within the close to time period, as Beijing has “hooked up nationwide strategic significance to reining in property bubbles.”

“Housing worth progress is predicted to decelerate sooner or later,” mentioned Zhang Dawei, chief analyst with property company Centaline.

“The variety of cities seeing a slowdown in costs progress will enhance.”

Earlier this month, rankings company Moody’s downgraded its outlook on China’s property sector to damaging from steady attributable to tighter entry to funding.

In an effort to ease housing woes of younger individuals, authorities have additionally elevated the availability of reasonably priced housing and moved to cap the price of house leases for the primary time.

(Reporting by Liangping Gao and Ryan Woo; Modifying by Ana Nicolaci da Costa)