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China's new home prices firm but momentum slows in some parts
[BEIJING] China's new home prices rose in July as the property sector held up as one of the few bright spots in the slowing economy, although momentum flagged in some markets as persistent curbs hit speculative investment.
Average new home prices in China's 70 major cities rose 0.6 per cent in July from the previous month, unchanged from June and marking the 51st straight month of gains, according to Reuters calculations based on National Bureau of Statistics (NBS) data on Thursday.
The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes, although the number of cities fell to 60 in July from 63 cities in June.
The property sector directly impacts over 40 industries in China and a fast deterioration would risk adding to pressure the economy, which is slowing due to weak domestic demand and an escalating trade war with the United States.
The Chinese government has clamped down on speculative investment in the housing market since 2016 to prevent a sharp correction as prices soared. There have also been growing concerns that high house prices are pushing up the cost of business and restricting consumer spending.
On a year-on-year basis, home prices rose at their weakest pace this year in July by 9.7 per cent, slowing from a 10.3 per cent gain in June.
In a sign the market's resilience may be waning in parts, property investment slowed to its weakest this year, data showed on Wednesday.
Beijing has repeatedly urged local governments to keep home prices from getting too frothy and unaffordable, but efforts by some regional governments to attract talent through home purchase incentives, along with easing credit conditions have kept prices surprisingly resilient this year.
Mortgage rates have also been coming down in some areas in response to regulators' calls on banks to ramp up lending to support the economy.
While tightening measures have been rolled out across hundreds of Chinese cities, price trends have been uneven across the country.
Prices in China's four top-tier cities - Beijing, Shanghai, Guangzhou and Shenzhen - rose 0.3 per cent from a month earlier, quickening from a 0.2 per cent gain in June.
But Beijing has dashed hopes it would ease its bubble-curbing measures to boost the faltering economy, saying in a high-profile work meeting in July it would not use the property market as a form of short-term stimulus.
China's banks extended surprisingly fewer new yuan loans in July, reflecting subdued demand. New household loans, mostly mortgages, fell to 511.2 billion yuan (S$101 billion) in July from 671.7 billion yuan in June.
Tier-2 cities, which include most of the larger provincial capitals, increased 0.7 per cent in July versus a 0.8 per cent rise in the previous month. And Tier-3 cities rose 0.7 per cent on a monthly basis, in line with June's pace.