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China's new home price growth slows as big cities decline
CHINA'S new home price growth slowed in February from the previous month as a raft of government curbs aimed at tempering speculative demand softened prices in the biggest cities, although strength seen in smaller centres remained intact.
Average new home prices in China's 70 major cities rose 0.2 per cent in February from the previous month, compared with an increase of 0.3 per cent in January, Reuters' calculations from National Bureau of Statistics (NBS) data on Monday showed.
Compared with a year ago, they rose 5.2 per cent in the month, picking up from a 5 percent increase in January.
Prices fell in China's top-tier cities after they stabilised in January, the NBS said in a statement accompanying the data, without giving a specific figure.
Shenzhen's new home prices fell 0.6 per cent month-on-month, after it stabilised in January. Beijing prices declined 0.3 per cent after posting a 0.2 per cent increase in the previous month, data showed.
"I think the policies currently in place (to curb speculation) are effective in a way that they made prices fall slightly in prime markets," said ING economist Iris Pang. "But they also result in a spillover effect that drives buyers who can't afford in those big cities to less expensive markets, which will continue to push up prices," she said, adding that she doesn't expect significant price falls in the biggest cities, despite the curbs.
The majority of the 70 cities surveyed by the NBS still reported monthly price increases for new homes although the number has dropped from the previous month. Forty-four cities reported higher prices in February, down from January's 52.
The declines in the four top-tier cities contrast with a steady rise in prices in China's vast spread of smaller cities. The fastest price gain was seen in Nanchong, a lower-tier city of about six million in south-western China's Sichuan province, where values of new homes rose 1.7 per cent on-month in February.
Price growth in tier-3 cities in general was unchanged from January, the NBS said, without giving details.
China removed sales prices for affordable housing in its January calculations, which prevents like-for-like comparisons with growth data before 2018.
Home price growth began to slow in the second half of 2017 as the government sought to deal with bubbles in its property markets, following almost two years of rapid expansion.
Property sales have shown signs of easing in recent months despite expectations of a spike in demand as developers ramp up promotions during the week-long Chinese New Year holidays when migrant workers head home. But analysts have remained optimistic about demand in smaller tier-3 and tier-4 cities thanks to favourable government policies aimed at reducing inventories.
Authorities are seeking to balance attempts to support real economic activity with efforts to rein in risks from an increasingly complex financial system.
Household loans - mainly mortgages - increased by 275.1 billion yuan (S$57.3 billion) in February, well below expectations and sharply down on January's record of 901.6 billion yuan.
On Monday, Chinese Housing Minister Wang Menghui said the government would step up property market regulation and fight off illegal conduct by property firms and intermediaries. Policymakers have vowed to push for a stable and healthy development of the property market this year, emphasising that homes are for living in, not speculative investment.
China will focus more on providing affordable housing and developing the rental market, Premier Li Keqiang announced earlier this month.
The country is also steadily pushing for a property tax law this year and expects it to be completed by 2020. REUTERS