Growth in China’s housing prices slowed in June with fewer cities reporting increases in home as local governments tightened property curbs to prevent the housing market from overheating.
Among 70 cities tracked by the National Bureau of Statistics, 63 of the mainland metropolii saw average new home prices rise in June, down from the 67 that reported price increases in May, according to the latest data released by the NBS.
The slowdown in home price growth coincided with a drop-off in new home purchases as recorded by the government agency.
Slowing Sales Cool Price Growth
Sales of new homes reached more than RMB 6.13 billion in the first six months of 2019, up by 8.4 percent compared to the same period last year, but growing at a rate 0.5 percentage points down from the the 8.9 percent pace set in the five months ending in May.
The area of housing sold in the first half of 2019 reached 661.8 million square metres, down by 1 percent compared to the amount of homes sold during the same period last year, a rate of decrease that quickened from the 0.7 percent drop recorded in the first five months of the year.
The tapering sales followed a campaign by China’s Ministry of Housing and Urban Rural Development (MOHURD) which, since April of this year has warned several cites of the risks of overheating property markets.
Cities have reacted with policy changes and monetary measures. Last month, Hangzhou guided banks to raise mortgage rates for first-time home buyers from 5 percent to 8 percent, while Nanjing took the step of instructing lenders to boost home loan rates from 5 percent to 15 percent.
That decrease in activity was reflected in the NBS housing price figures. Average new home prices in the 70 cities rose 0.6 percent in June from a month earlier, a pace 0.1 percentage points slower than the growth recorded in May. While home prices were up 10.3 percent year-on-year in June, that annual growth rate had slackened from the 10.7 percent pace set in May.
Govt Cools Market at Mid-Year
“The sales price of new commercial residential buildings in the first, second and third tier cities was the same as or similar to that of the previous month,” NBS statistician Liu Janwei commented in a separate market analysis published on the same day as the last housing data was released.
Of the 70 major cities, 16 urban hubs had monthly home price growth rate of over 1 percent, led by Luoyang, in Henan Province, which saw the price of housing jump by 2.5 percent. Hohhot, the capital of Inner Mongolia, along with Dali in Yunnan province, tied for the title of having the second fastest growing housing markets with 1.8 percent price increases.
Five cities, including Beijing, saw home prices drop, with Yichang in Hubei Province experiencing the sharpest decline at 0.4 percent. Beijing’s new home prices decreased by an average of 0.1 percent month-on-month.
Top Cities Stay Flat
China’s four top-tier cities — Beijing, Shanghai, Guangzhou and Shenzhen — averaged new home price growth of 0.2 percent from May, slower than the 0.3 percent monthly expansion pace set the previous month.
In tier- two cities, which include most of China’s provincial capitals, home prices grew an average of 0.8 percent in June, in line with the pace in May.