,Tightening rules: Listings of apartments for sale displayed at a real estate office in Shanghai. Home prices in 70 Chinese major cities either grew marginally or edged down in August. — Bloomberg
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SHANGHAI: China’s home prices increased in August but at a slower pace as regulatory measures continue to rein in and stabilise the disorderly market. So, major cities are expected to see limited room for growth in home prices, industry experts said.
In August, home prices in 70 Chinese major cities either grew marginally or edged down, both in year-on-year and month-on-month terms, suggesting the long-term nature of tightening rules continues to have the desired effect at local levels, said Sheng Guoqing, chief statistician with the National Bureau of Statistics (NBS).
Last month, new home prices in the 70 major cities tracked by the NBS grew 0.2% month-on-month and 3.7% year-on-year.
Some 46 cities reported higher new home prices, down from 51 cities in July.
Top-tier cities’ new home prices remained resilient with a 0.3% increase on average from the previous month.
Shenzhen reported the largest month-on-month price increase of 1%, followed by Shanghai (0.4%) and Beijing (0.2%).
But, in Guangzhou, Guangdong province, home prices decreased by 0.1%.
Compared to a year ago, the four benchmark cities’ new home prices grew at a slower pace of 5.7% on average.
It was 0.3 percentage point less than that of the previous month, according to the NBS.
The 31 second-tier cities, mostly provincial capitals, rose 0.2% month-on-month, and 4.4% year-on-year, while the figures stood flat and 2.8%, respectively, for the 35 third-tier cities.
Entering the third quarter, there appeared apparent signs of prices cooling.
Local governments’ tighter credit policies, in particular, led to fewer transactions that in turn led to a decrease in home prices, said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.
In third-tier cities, new home prices ended a 17-month period of growth in August although no tighter home purchase regulations were announced.
In August, Yueyang’s local bureau of housing and construction issued a notice requiring that new home prices cannot be higher than the selling price the developer has filed with local housing authorities, nor 15% lower. Similar measures were taken in at least seven third and fourth-tier cities.
Li Yujia, chief analyst at the provincial residential policy research center of Guangdong, said residential developers’ marketing and promotional activities do not reflect a spirit of fair play.
Market dynamics could get skewed when low-quality projects sell more on extensive promotions than high-quality properties offering smaller discounts.
“Apart from February 2020 when Covid-19 hit severely, this is the first time since 2016 that nearly half of China’s major cities saw their pre-owned home prices drop, showing the new tighter regulations have had the desired effect,” said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.