China’s housing inflation eased slightly last month, with home prices in major cities remaining unchanged for the second straight month, revealed official data released on 18 September.
According to Reuters’ calculations, new home prices climbed 4.1 percent in August from a year ago, down from the annual gain of 4.3 percent in July, indicating that the central government’s measures to cool the real estate market are taking effect.
Even without the National Bureau of Statistics’ nationwide average home price updates in China, its latest figures for 70 cities revealed that new home prices in first-tier cities, including Beijing, Guangzhou, Shanghai and Shenzhen, stopped rising for the second consecutive month in August.
Since 2009, the country has implemented several regulatory measures, including restrictions on the number of homes each family can purchase and property taxes in two cities to rein in speculation and curb runaway housing inflation, which is causing social unrest.
Furthermore, Chinese banks have trimmed exposure within the real estate sector, with fewer mortgage approvals, as well as larger down payments and interest rates, making it more difficult for individuals to purchase homes.
This resulted in the decline of home prices in 16 cities in August, while existing home prices also fell in 26 cities last month compared to 19 cities in June and 12 cities in July.
Conversely, the statistics bureau reported that home prices in Beijing experienced a 1.9 percent increase from a year ago, while Shanghai rose 2.8 percent.
“Asset prices in China’s second- and third-tier cities are still rising rapidly, as local governments are reluctant to place more strict policies,” said Liu Li-Gang, a Hong Kong-based economist at ANZ Bank. “Especially some western and central cities are facing big pressure to pay out debts, while their main revenue comes from land sales.”
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