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 Average new home prices in China's 70 major cities rose 9.6 percent
in January from a year earlier, easing from the previous month's 9.9
percent rise, according to Reuters calculations based on data
released by the National Bureau of Statistics (NBS) on Monday.
It was the first slowdown in the rate of price increases since
November 2012.
House prices in China have surged in the past year but the market
began to show signs of losing momentum at the end of 2013 as local
governments took further tightening measures at the prompting of a
central government worried about the risk of an asset bubble.
"Because of the effects of a series of government measures including
tightening curbs in some cities and an increasing supply of
affordable housing, the market environment and pricing expectations
were relatively stable," said Liu Jianwei, a senior statistician at
the NBS.
"Tightening credit conditions and easing pressures from housing
inventories also helped home sales to drop, which in turn eased the
home price rises further in some cities," Liu said in a statement
accompanying the data.
Prices in the capital Beijing rose 14.7 percent in January from a
year earlier, easing from December's year-on-year increase of 16
percent, and the third month of slowing gains after a record jump in
October.
Shanghai price gains eased to 17.5 percent in January from a year
ago, versus 18.2 percent annual growth in December.
Home sales were also likely to have cooled in most major cities in
January due to the Lunar New Year holiday, when business activity
slows markedly.
With China's annual parliament session coming up in March, analysts
are also looking ahead to the possibility of further price-calming
measures being announced, making it difficult to predict whether the
slowdown will continue.
However, many analysts expect gains to moderate this year on
relatively tight liquidity and subdued demand following strong
demand seen in 2013.
NBS housing data at the end of last year had shown the first signs
that the relentless rises of 2013 were coming to an end, and a
growing number of experts and developers are no longer as optimistic
on the sector. Some have started to talk about downside risks.
LENDING CURBS?
Adding to concerns over the market, the official Shanghai Securities
Journal said on Monday that China's Industrial Bank Co Ltd
<601166.SS> had suspended some types of property-related loans,
although several other banks have kept property loan policies
unchanged.
Industrial Bank later confirmed in a statement that it had halted
mezzanine financing for the real estate sector which accounts for a
small portion of its overall lending business, pending new rules on
its property-related loans to be unveiled by the end of March.
Shares in property developer China Vanke Co Ltd <000002.SZ> fell 6.6
percent on Monday after the report, while China Resources Land Ltd
<1109.HK> ended down 6 percent.
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Mortgage lenders including Agricultural Bank of China Ltd
<601288.SS>, Bank of Communications Co Ltd <601328.SS> and China
Merchants Bank Co Ltd <600036.SS> did not respond to calls.
Separately, media reported that some property developers in the
eastern city of Hangzhou had started to cut home prices as some of
them are in urgent need of cash.
The NBS figure showed Hangzhou's home prices dropped 0.1 percent in
January from the previous month, along with four other cities that
saw month-on-month drops in January.
However, developers in Shanghai reached by Reuters on Monday said
they had no plan to cut prices and were not concerned about the talk
of bank lending curbs.
"The rumors will not influence us. Lingang is very popular now and
the price will only go up," said a salesman at a Shanghai-based
property firm, referring to a property development in the city's
Pudong district.
Analysts, however, said that tighter liquidity and moderate home
sales this year may force developers to become more reasonable about
pricing their projects.
"We do not rule out the possibility of more projects employing
price-cutting strategies due to various project or company-specific
reasons," Alvin Wong, a property analyst at Barclays, said in a
research note.
"Nevertheless, we think the chance for substantial price cuts to
spread over the whole sector remains slim," Wong said.
China's property market has seen a divergence between big cities,
where strong demand and short supply have pushed up prices rapidly,
and small ones, where rises have tended to be slower on soft demand.
"Property price differences between first- or second-tier and third-
or fourth-tier cities can be expected to remain noticeable over
coming months," Weibin Xu, a senior consultant at EC Harris, said in
an emailed comment.
Another factor working against government measures is a hot land
market in some main cities.
Combined revenues from land sales in Beijing, Shanghai, Guangzhou
and Shenzhen reached 81.9 billion yuan ($13.5 billion) in January,
more than twice that in the same period last year, according to data
from China Real Estate Information Corp, a property data provider.
(Reporting by Xiaoyi Shao and Jonathan
Standing; additional reporting by Clement Tan in Hong Kong, Gabriel
Wildau in Shanghai, and the Shanghai newsroom; editing by Chris
Gallagher and Robert Birsel)
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