New home prices in China maintain steady growth in October

Beijing

CHINA'S new home prices maintained steady growth in October but soft patches emerged in the country's larger cities where momentum slowed, suggesting local authorities could relax some antispeculative measures to prop up faltering demand.

Average new home prices in China's 70 major cities rose 0.5 per cent in October from the previous month, in line with September's growth and marking the 54th straight month of gains, Reuters calculated based on National Bureau of Statistics (NBS) data on Friday.

Most of the 70 cities surveyed by NBS still reported monthly price increases for new homes, though the number was down to 50 from 53 in September, the lowest level seen since February 2018, when it was 44.

Annual growth also pointed to softness in the sector with home prices rising 7.8 per cent in October, slowing from 8.4 per cent in September and the weakest pace since August last year.

"We expect property market conditions to worsen, especially in low-tier cities," Nomura analysts wrote in a note. "We also believe Beijing may need to reverse its tightening measures on the property sector no later than spring 2020 to stabilise growth."

The modest rise in prices nationally masked mixed trends across the country with some cities showing signs of rapid cooling while others are still plagued with overheating risks.

Price growth in China's mega-cities - Beijing, Shanghai, Shenzhen and Guangzhou - rose 0.1 per cent from a month earlier, slowing from a 0.4 per cent gain in September, the statistics bureau said in a statement accompanying the data. Beijing, the Chinese capital and home to about 22 million people, saw new home prices fall 0.2 per cent month-on-month.

In contrast, prices in tier-2 rose 0.5 per cent and tier-3 cities rose 0.6 per cent, slowing 0.1 and 0.2 percentage points, respectively. Xining, a city of 2 million in central China, was the top price performer in the month, rising a robust 2.8 per cent on a monthly basis.

While Chinese regulators have vowed not to use the property sector as a tool to stimulate demand, some analysts say the sector's broader moderation could give provincial governments an excuse to loosen curbs as growth slows to near 30-year lows.

For example, several centres, including lower-tier cities like Nanjing and Tianjin, have eased home purchase curbs as an incentive to attract skilled labour, a move seen by some as a way to boost the local property market. A former central bank adviser earlier this week said China's real estate curbs were appropriate and did not need further tightening.

The National Institution for Finance & Development (NIFD), a governmentbacked think-tank, said in a study this week that property-related financial risks are still a major concern for Chinese regulators, and suggested that a nation-wide reversal in curbs is unlikely.

Data released on Thursday showed China's property investment and sales growth both eased to a three-month low in October. Notably, growth in property transactions slowed during what is traditionally China's "Golden September, Silver October" peak season for new home sales, hurt by persistent pressures in the sector as a crackdown on speculators showed few signs of abating.

Beijing has recently tightened developer financing channels, especially through trust loans and offshore dollar bonds.

The price moderation, though modest, is having a more pronounced downstream effect in the property market, analysts said.

Yan Yuejin, director of the Shanghaibased E-house China Research and Development Institution, said declines seen in resale prices showed homeowners were under increasing pressure to cut prices as developers rushed to make new projects cheaper amid year-end promotions. REUTERS