China Property Data Offers Mixed Messages

By Glenn Dyer | More Articles by Glenn Dyer

More contradictory signals from China’s property market – earlier last week we learned that monthly sales rose noticeably in January and February and January, and the pace of investment picked up.

On the weekend we learned that while price growth picked up across the country’s 70 major cities in February after four months of gradual deceleration, some major cities experienced slowing or no price growth month on month.

China’s National Bureau of Statistics (NBS) issued figures showing new home prices rose 0.3% in February from January, up from the 0.2% rise in the first month of the year.

But the pace of new home price growth slowed a touch to an annual rate of 11.8% in February (which would make Sydney proud), compared with January’s 12.2% jump, according to the NBS.

Major cities, Shenzhen, Shanghai and Beijing saw prices rise an annual 13.5%, 21.1% and 22.1%. Though large, all were slower than January’s annual growth rates.

On a monthly basis, Shenzhen prices fell 0.6%, Shanghai prices rose 0.2%, and prices in Beijing were flat.

According to the National Bureau of Statistics (NBS), of the 70 cities surveyed, 12 of them saw a month-on-month price drop, with new residential housing prices in two cities remaining flat in February.

But more than half the 70 cities saw month on month gains.

The NBS said that in month on month prices occurred in 56 of the 70 cities surveyed – 37 cities month-on-month price increased less than 0.5% for newly-built homes in February, but a further 19 cities saw home price gains higher than 0.5% last month.

In January, of 70 large and medium-sized cities surveyed, 45 saw prices for new residential housing climb month on month in January, down from 46 in December and 55 in November, according to the National Bureau of Statistics.

On Friday, Beijing’s municipal government announced new steps to rein in its booming housing market, raising the down payment requirement for second home purchases in the city to at least 60% from 50%.

Chinese media saw second home sales surged more than 50% in the first two weeks of March, prompting the crackdown.

Other Chinese cities have revealed plans to try and cool hot housing markets in their area, or tighten existing policy.

Cities such as Hangzhou and Nanjing were among the latest major cities to tighten home purchase rules, especially for second and more dwellings.

China’s authorities say they will keep the property market stable and attack speculation this year.

After the annual parliament closed on Wednesday, the government added a pledge to contain fast-rising home prices to its work report (a list of things ’to do’ this year,) as the property market resists measures to control price gains.

The banking regulator and central bank have reportedly told banks to curtail mortgage lending and this emerged in figures published on March 9 showing household loans, mostly mortgages, accounted for 25.7% new loans in February, down from 37% in January and 50% in 2016.

China’s central bank raised its short-term money market interest rates for the third time this year on Thursday – after the US Federal Reserve raised its rates – a move analysts say will make mortgages less attractive for Chinese banks as costs rise.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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