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China’s home prices continued to surge in December, though the pace of gains overall did not exceed the previous month’s and rises eased in some major cities, suggesting that government tightening measures may be starting to bite. |
Home prices in many Chinese cities have continued to set records in the past year despite a four-year long government campaign to cool the market, adding to the threat of a price bubble and forcing some local governments into a fresh round of curbs in November.
Average new home prices in 70 major Chinese cities climbed 0.4% in December, easing from November’s 0.5% and the fourth straight slowdown since August’s 0.8% gain, according to Reuters calculations from data released by the National Bureau of Statistics (NBS) yesterday.
“The slower home price gains in December showed recent curbs unveiled by local governments in tier-1 and some tier-2 cities have started to stabilise market expectations gradually,” said Liu Jianwei, a senior statistician at NBS, in a statement accompanying the data.
Under pressure to rein in a red-hot housing market, many local governments have rolled out targeted measures to cool fast-rising property prices, including raising minimum down payments for second homes and promising to supply more land for building residential properties.
Prices in the capital Beijing rose 16% in December from a year ago, easing slightly from November’s year-on-year increase of 16.3%, and the second month of slowing gains after a record jump in October.
In the southern cities of Guangzhou and Shenzhen, gains eased to 20.1% and 19.9% respectively from 20.7% and 20.6% in November, their first slowdown this year.
Still, the government measures are yet to significantly curb buyer appetite and property inflation. The NBS data showed nationwide new home prices rose 9.9% in December from a year ago, the 12th consecutive annual rise and the same as the previous month’s record gain.
The relentless rise of home prices suggests Beijing won’t let up on its tightening measures anytime soon.
China’s housing minister said in December the government would maintain controls on the property market in 2014 while increasing land and housing supply in cities facing big home-price increases.
More recently, local media reported on Monday the land ministry plans to form a nationwide property registry database, seen as a precursor to any country-wide expansion of property taxes, which have been on trial in Shanghai and Chongqing since 2011.
However, efforts to get the database up and running have faced resistance from local governments and groups with vested interests.
China’s property values have surged over 20% in the past four years, underscoring worries of a property bubble and social unrest as millions of first-home buyers are priced out of the market.
Policy makers want to avoid a sharp slowdown in the property market as real estate is a bright spot in a slowing economy. The sector supports some 40 other industries and generates about 16% of the country’s $8.5tn gross domestic product.
The next several months will probably shed more light on whether Beijing has done enough to tame the market. Analysts say China’s home price rises are likely to moderate in 2014 thanks to increased supply and impact of government measures.