BEIJING (Reuters) – Home property prices in Beijing fell for the first time in more than two years in June, while Shanghai further declined and Shenzhen stalled, pointing to significant cooling in China’s biggest real estate markets, official data showed.
Nationwide, home price growth slowed slightly in June as government efforts to keep prices in check weighed on larger cities, though smaller cities maintained rapid growth.
People in the industry expect home prices in China’s largest cities to stay on a mild slowing trend for the next 12 months.
In June, average new home prices in China’s 70 major cities rose 10.2 percent from a year earlier, decelerating from May’s 10.4 percent gain, according to Reuters calculations based on an official survey out yesterday.
On a monthly basis, new home prices rose 0.7 percent in June, the same as the previous month’s reading, Reuters calculations based on data issued by the National Bureau of Statistics (NBS) showed.
“China’s 15 hottest property markets, mostly first- and second-tier cities, remained stable in June as a city-based property policy continued to take effect,” the NBS said in a statement accompanying the data release.
More than 45 cities, most of them top-tier cities with a sizable population, have imposed varying levels of restrictions since last October to curb fast-rising prices, with most of the latest measures introduced in late March.
These measures have started taking some heat out of the market, with sales and investment in property cooling slightly in the second quarter.
The cooling effect is most visible in China’s biggest cities.
Shenzhen, Shanghai and Beijing price growth slowed to 2.7 percent, 8.6 percent and 10.7 percent, respectively, from a year earlier.
From a month earlier, prices in Beijing fell 0.4 percent, marking the first fall since February 2015. Shanghai prices slipped by a further 0.2 percent, while Shenzhen prices remained unchanged.
The value of new personal home mortgages in Beijing, Shanghai and Shenzhen in the first half of 2017 was equal to 30 percent of the total value of home loans in 2016, a Chinese state newspaper has reported.
“Sales declines in the biggest cities were quite significant, so prices are certainly not going to rebound,” said Rosealea Yao, a property economist with Gavekal Dragonomics.
“I think the mild declining trend will continue through at least the first half of 2018,” Ms Yao said.
Nonetheless, real estate investment and sales growth both sped up in June after slowing in May, most likely due to more robust demand in smaller centres that have been encouraged to reduce inventory and are not subject to the strict curbs at work in bigger cities.
Luoyang, a third-tier city in central Henan province, topped the list in June, with prices of new units up 2.3 percent on month, compared with a 1.3 percent gain in May, taking the annual growth to 10.2 percent.
China’s booming property market has been a solid support for economic growth for the past year, but it came at the cost of soaring housing prices that have triggered fears of a market collapse and the breakout of systemic financial risk.