Home prices stable, despite smaller cities prodding values upward

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Growth in China’s new home prices sustained its momentum in November, with increases seen in provincial centers and smaller cities even as the days of untethered runaway prices boom are gone.

Average new home prices in China’s 70 major cities rose a muted 0.3 percent in November from the previous month, in line with October’s price gains according to National Bureau of Statistics (NBS) data out on Monday.

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New home prices rose by 5.1 percent year-on-year in November, down from October’s 5.4-percent increase as the pace of growth slowed in the face of government efforts to engineer a soft landing in the housing market.

The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes. Fifty cities reported higher prices in November, unchanged from October, indicating broad strength in markets nationwide.

But as mega-cities like Beijing impose increasingly stringent measures, speculators have moved to smaller centers this year where authorities offer cheap credit and impose 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 price growth in November. They rose by 0.5 percent from a 0.3-percent increase in October, the NBS said. The smaller tier-3 cities rose by 0.4 percent from a 0.3-percent gain in October.

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Authorities have been particularly focused on curbing lending for speculation in the housing market in a broad effort to defuse financial risks from a rapid build-up in debt.

Yan Yuejin, an analyst with Shanghai-based E-house China R&D Institute, said the widening gains may have to do with “relaxed tightening policies” at the local government level in November.

While monthly price rises peaked in September 2016 at 2.1 percent nationwide, they have softened only slowly, regaining momentum as buyers shrugged off each new measure to curb speculation.

Central bank data last week showed household loans, mostly mortgages, rose to 620.5 billion yuan or 93.89 billion US dollars in November from 450.1 billion yuan in October, according to calculations.

Prices for new private homes in top-tier cities fell by another 0.1 percent in November, after a 0.1-percent decline in October, the NBS said in a note accompanying the data.

Source(s): Reuters