Skip to main content



Growth in China’s home prices slows, prompting easing

Beijing — China’s new-home prices rose at a slower pace in more cities last month as developers offered discounts and the economy slowed, prompting the easing of property curbs in some places.

Beijing — China’s new-home prices rose at a slower pace in more cities last month as developers offered discounts and the economy slowed, prompting the easing of property curbs in some places.

Compared with 56 cities in March, prices last month climbed in 44 of the 70 cities tracked by the government — the fewest cities with price gains since October 2012, when rises were recorded in only 35 cities on a monthly basis.

Home-price growth moderated both in first-tier and less affluent cities. Prices in Beijing rose 0.1 per cent from March, said the National Bureau of Statistics in a statement yesterday — the slowest since September 2012, while Shanghai prices rose 0.3 per cent, the smallest gain since November 2012. Hangzhou in the east had the largest decline last month among cities tracked, with prices falling 0.7 per cent from a month earlier.

“We’ll see more relaxation of policies in the coming months because local governments will have more incentive to do this as the market slides further,” Citigroup Inc’s Hong Kong- based senior China economist Ding Shuang said yesterday. He added that home-purchase restrictions should be relaxed to increase demand.

On May 13, the central bank called on the biggest lenders to accelerate the granting of mortgages, after sliding home sales and property construction helped drag the world’s second-largest economy to its slowest pace in six quarters in the first three months of the year. Developers including China Vanke Co had cut property prices since March to lure homebuyers, said China Real Estate Information Corp.

Curb Easings

Home sales fell 18 per cent last month from March, the statistics bureau reported last week, while private data also showed the housing market cooling. Prices climbed 9.1 per cent in April, slowing for a fourth month, said SouFun Holdings — the nation’s biggest real-estate website.

At least six smaller Chinese cities have started relaxing local curbs on speculative and investment-driven home buying since last month. The city of Zhengzhou in Henan province issued draft rules to promote home purchases by low-to-middle-income households, said a statement posted on the government’s website on May 7.

Prices were unchanged in 18 cities in April from a month earlier.

Accelerate Credit

New-home price gains in first-tier cities also slowed from a year earlier. Housing prices in Guangzhou and Shenzhen in the south each rose 11 per cent from a year earlier, while prices in Beijing jumped 8.9 per cent. All three cities recorded the slowest pace since March last year.

“The only effective measure to ease the housing downturn is to reaccelerate, or at least stabilise, credit growth,” China economist Yao Wei at Societe Generale SA in Hong Kong, wrote in a May 13 report. “Clearly, policymakers know which lever to pull, but the question is to what extent.”

The government should adopt a measured and targeted credit easing as a credit binge will inflate the industry again and deepen the oversupply in smaller cities, she said.

Chinese policymakers’ reluctance to step up monetary stimulus is being tested by data last week that showed the nation’s economic slowdown had deepened, with unexpected decelerations in industrial output and investment growth, as well as a decline in home sales.

Factory production rose 8.7 per cent last month from a year earlier, down from 8.8 per cent in March. Fixed-asset investment excluding rural households increased 17.3 per cent in the first four months of the year — the slowest for the period since 2001.

Existing-home prices fell 0.2 per cent in Beijing last month from March and were unchanged in Shanghai, yesterday’s data showed. Beijing, Shanghai, the country’s financial centre, and the business hubs of Guangzhou and Shenzhen are considered first tier by the bureau of statistics. Bloomberg

Read more of the latest in




Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.