China Home Price Growth Frozen in August as Curbs Take Effect

Growth in prices of new homes in China’s major cities nearly ground to a standstill in August, slowing still further from July, according to official data released on Monday, as demand suppression measures continue to lock down the housing market.

The data from the National Bureau of Statistics (NBS) shows that new home prices grew in 52 of the country’s 70 major cities month-on-month in August, down from 61 cities in July. Average new homes prices in the 70 cities rose 0.2 percent month-on-month in August, easing from growth of 0.4 percent in the previous month, according to Reuters calculations based on the data.

The agency reported that prices grew by 8.3 year-on-year in August, compared to an annual gain of 9.7 percent in July. The most recent month’s increase marked the slowest rate of growth since July 2016, and the ninth straight month of price deceleration from a peak growth rate of 12.6 percent last November.

All is Calm for Upcoming Party Meetings

The new data suggests that the restrictive policies rolled out this year by more than 45 major cities are taking effect. Beginning in March, local governments have issued a flurry of regulations ranging from higher down-payment requirements to price caps on the rates that developers can charge for their products in some municipalities.

The signs of a cooling-off in the housing market suggest that the government may refrain from further tightening measures ahead of the 19th Party Congress, a key leadership meeting being held next month. Shares in some of mainland China’s top residential developers jumped on the Hong Kong exchange following the news.

Shanghai, Beijing Prices Frozen in August

Prices in six cities including Shanghai and Beijing, where some of the toughest measures have been imposed, were unchanged month-on-month, although on a yearly basis, prices grew by 2.8 percent in Shanghai and 5.2 percent in Beijing. Shenzhen and Chengdu saw prices dip by 0.4 percent and Guangzhou by 0.7 percent. With a year-on-year drop of fall 1.9 percent, Shenzhen also saw its first its first annual decline since March 2015.

Although China’s first- and second-tier cities appear to have stalled out in terms of home price growth, many of its smaller cities are poised to heat up over the next few months due to inventory constraints and the onset of a peak sales period in September and October. The NBS reported that new home prices in third-tier cities climbed by 0.4 percent in August, faster than average but less than the 0.6 percent growth recorded in July.