MNI DATA ANALYSIS: China Home Prices Cool On Tighter Policy

     BEIJING (MNI) - Prices of new-build homes in China have cooled since Q3

2019, with prices contracting on a monthly basis for five consecutive months as

strict government policy controls kicked in. 

     The average price for a new home in 70 major monitored cities rose 0.6% m/m

in January, slowing from the 0.8% reported in the previous month. This is the

fifth straight month that growth has fallen, starting in September 2018. 

     The slowdown is due to the "implementation by local governments of

stabilizing land prices, home prices and expectations to boost the healthy

development of the real estate market," the Statistics Bureau said in its

statement. 

     The annual average price for a new home in the 70 cities, however,

increased faster in January -- a 10.8% gain, the fastest in 21-months. But this

round of gains came mainly on the back of a low base effect. China carried out

"the most strict restriction measures" starting from Beijing then to other big

cities in March 2017, after then the property prices tumbled.

     Net rise number of cities, gauging a dynamic trend of city numbers,

reported a decline in January both on monthly (50 vs 51) and annual basis (66 vs

68), which means prices are falling in more cities and rising in fewer,

signalling slowing prices.

     President Xi Jinpeng has repeated several times that "houses are used for

living in, not for speculation", emphasizing the priority in tackling overheated

house prices.

     --SOME INCREASED DEMAND

     New home prices for tier-2 and tier-3 cities are finding support as the

prices in tier-1 cities are more strictly controlled.

     The number of tier-2 cities which have witnessed rising prices has been

increasing for 12 straight months starting from January last year while that for

tier-3 cities have recorded 7 consecutive months of gains -- among which, all 35

tier-3 cities reported higher prices in the last 6 months.

     Tier-2 and tier-3cities in western China, including Xi'an (the capital of

Shaanxi), Guiyang (the capital of Guizhou) Hohhot (the capital of Inner

Mongolia) and Dali(a famous tourist town in Yunnan), have seen the quickest

gains in the last four months on a m/m basis over the last 6 months, reflecting

stronger demand from secondary cities as living costs become too expensive in

the big cities.

     Overall, the housing market met central government requirement laid down in

its 2016 central economic working conference to "destock the property in

tier-3/4 cities and boost urbanization".

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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