China's new home prices slow in November as market-cooling steps take hold

China’s new home prices grew in November at their slowest monthly pace since March, official data showed yesterday, as policy-makers wary of financial risk in the highly leveraged sector continued to pursue market-cooling measures.

The data comes ahead of a slew of economic figures due for release today, from which market watchers hope to determine the strength of recovery of the world’s second-largest economy as the coronavirus-blighted year nears an end.

The average new home price across 70 major cities rose 0.1 percent in November from the previous month, Reuters calculated from National Bureau of Statistics data. That compared with 0.2 percent on-month growth in October.

Prices rose 4.0 percent in November from the same month a year earlier, the weakest rate since February 2016. That compared with a 4.3 percent on-year increase in October.

New home prices in four first-tier cities — Beijing, Shanghai, Guangzhou and Shenzhen — rose 0.2 percent month on month in November, 0.1 percentage points slower from the previous month, according to data from the NBS.

On a month-on-month basis, new home prices in 31 second-tier cities and 35 third-tier ones both edged up 0.1 percent.

Prices of resold homes in first-tier cities edged up 0.5 percent month on month in November, with the rise unchanged from the previous month. Prices in the resold home market in second-tier cities went up 0.1 percent and third-tier cities saw a month-on-month growth of 0.2 percent.

On a year-on-year basis, home prices in first-tier cities went up 3.9 percent last month, retreating from a 4.1-percent expansion seen a month earlier, while those in second-tier cities rose 4.2 percent.

The data also showed the number of those cities reporting monthly new home price increases fell to 36, from 45 in October — the lowest since February during the height of the pandemic in China, said analyst Zhang Dawei at property agency Centaline.

Zhang attributed the softening momentum to stepped-up market tightening policies, as well as increased supply and discounting as developers ramped up sales activity towards year-end.

China’s property market has recovered quickly from the COVID-19 pandemic, with home sales and investment growing at a robust pace, prompting the government to step up efforts to deleverage the highly indebted sector to curb financial risk.

China’s investment in property development rose 6.3 percent year on year in the first 10 months, picking up from the 5.6 percent increase in the first nine months, official data showed.

Investment in residential buildings came in at 8.63 trillion yuan (US$1.32 trillion), up 7 percent from the same period last year, quickening from the 6.1-percent surge in January-September period.

Commercial housing sales in terms of floor area totaled 1.33 billion square meters in the first 10 months, basically unchanged compared with the same period last year.

However, price rises are uneven and concentrated in the southern Pearl River Delta and eastern Yangtze River Delta. In the north, some cities have seen demand slump after an initial spurt, prompting authorities to act to prevent a market crash.