China's new home prices grow at slowest rate since 2016 on tighter rules

Beijing

NEW home prices in China grew at their slowest pace in over 4½ years as tightening measures in some big cities helped cool the property market, despite a broader economic recovery.

New home prices in China also grew at a slightly slower monthly pace in September, official data showed on Tuesday, and the number of cities reporting monthly price increases for new homes fell.

A recovery in China's property market has provided much-needed support to an economy hard-hit by the coronavirus earlier this year. But policy-makers have rolled out new restrictions in recent months on concerns of a potential market bubble.

"The broad tightening of housing policies since July has had an impact on home prices data," said Zhang Dawei, a Beijing-based analyst with property agency Centaline.

Average new home prices in 70 major cities rose 0.4 per cent in September from a month earlier, compared with a 0.6 per cent increase in August, showed Reuters calculations based on data released by the National Bureau of Statistics (NBS).

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On an annual basis, home prices rose 4.6 per cent in September, the slowest pace since February 2016, and versus a 4.8 per cent expansion in August.

More than 20 cities have imposed new rules since July to prevent sharp price rises; regulators have introduced stringent rules to contain property developers' debt levels.

In September, many developers moved to cut prices to attract buyers ahead of the eight-day National Day holiday.

"The softening growth is also due to an increase in supply as developers ramped up sales promotion during the traditionally peak season," Mr Zhang added. As China's recovery firms, economists say policy-makers will be watching home prices closely and will tweak rules as necessary.

Real estate investment in China rose at the fastest pace in nearly 1½ years in September. Household leverage ratio meanwhile soared to a record in June, threatening to hobble private consumption, a key source of growth.

The NBS data on Tuesday also showed the number of cities reporting monthly price increases for new homes fell to 55 out of 70, from 59 in August. Tier-3 cities reported the strongest monthly gains.

China's home prices are expected to rise 4.8 per cent this year, a Reuters survey showed in late September, at a slower pace than last year, as Beijing shifts to de-leverage the sector. REUTERS