China’s home prices rose 0.1 percent in August continuing two months of moderate growth that signalled a gradual recovery in the property market as the government looks to improve the economy.
China’s real estate market directly affects 40 other business sectors in the country and is a key driver for growth.
However, any sign of market recovery could create uncertainty over risks that Beijing will tighten its policies through sales controls and property tax.
“China is more likely to tighten policy, probably expanding the property tax beyond Shanghai and Chongqing in the fourth quarter to other first- and second-tier cities where home prices are rising fast,” said Shi Qi, property analyst at CEBM.
Based on data from the National Bureau of Statistics (NBS), the 1.4 percent year-on-year price decline in August was the sixth successive easing, but the month-on-month price falls only lasted from October to May and ended in June, Reuters reported.
In August, home prices in 35 of 70 major cities in the country rose month-on-month, a drop from 49 in July, attributed to measures to re-tighten property policies.
“The data showed the pace of the home price rebound is easing. That is partly because the government has stopped approvals for the sale of expensive homes or suspended the registration of highly priced homes,” said Qi.
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