China home price growth slows as property curbs dent demand

Bloomberg
China’s overheated property market continued to cool in November as authorities rolled out renewed home-buying curbs to deflate a housing bubble.
New-home prices, excluding government-subsidized housing, gained from the previous month in 55 of the 70 cities tracked by the government, compared with 62 in October, the National Bureau of Statistics said Monday. Prices dropped in 11 cities, compared with seven a month earlier. They were unchanged in four.
Local authorities from Shanghai to Tianjin stepped up property curbs last month, following a raft of restrictions rolled out in almost two dozen cities since late September. That has reined in runaway prices, with the value of homes sold last month gaining at the slowest pace this year, official data last week showed.
President Xi Jinping and his top economic policy lieutenants reiterated their vow to curb a property bubble in the annual planning conference concluded Friday. “Houses are built to be inhabited, not for speculation,” the leaders said in their post-meeting statement released by the official Xinhua News Agency. China will use finance, land, taxation, investment and other instruments to establish a “fundamental and long-term system” to curb asset bubbles and market volatility, according to the statement.

‘DIFFERENTIATED APPROACH’
“The government looks set to continue with its cautious differentiated approach towards containing the property bubble risk whilst at the same time being careful not to upset its stabilization,” said Donna Kwok, a senior China economist at UBS Group AG in Hong Kong.
New-home prices in Shenzhen, the nation’s hottest property market earlier this year, fell 0.3 percent in November from October, the second straight month of declines, the data showed. Prices in the capital Beijing and Shanghai both snapped a 20-month streak of gains. Shanghai, which introduced restrictions in March, last month increased the down-payment threshold for first-home purchasers from 30 percent to as much as 70 percent if they have mortgage loan record, dealing a blow to purchasers seeking to buy more expensive homes.
“Tamed price growth shows policy tightening, together with the various administrative measures such as suspending pre-sales permits, have been effective,” JPMorgan Chase & Co. analysts led by Hong Kong-based Ryan Li wrote in a Dec. 13 note. “There should be less tightening in 2017.”
A cooling of the property market may translate into a new headache for policy makers, who are seeking to avoid a housing bubble without denting economic growth. Investment in real estate development gained 5.7 percent last month in the slowest year-on-year increase in four months, according to Bloomberg calculations based on official data. New property starts, a leading indicator of investment, increased 3.3 percent, contracting from a 20 percent gain in October.