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China's new home price growth slows amid tightened rules

China's new home price growth slows amid tightened rules

The Taoyuan Xindu Kongquecheng apartment compound developed by China Fortune Land Development is seen in Zhuozhou, Hebei province, China on Mar 19, 2021. (File photo: Reuters/Lusha Zhang)

BEIJING: China's new home prices rose at the slowest clip in six months in July, as authorities further tightened rules in the red-hot property sector, including limits on some categories of purchases.

Average new home prices in China's 70 major cities rose 0.3 per cent in July from a month earlier, slowing from a 0.5 per cent gain in June, according to Reuters calculations based on data released by the National Bureau of Statistics (NBS).

Separate showed property investment also rose at a slower pace in January-July from a year earlier, amid tightened financing rules.

China's property market rebounded quickly from the COVID-19 crisis last year, triggering concerns about financial risks in an overheated market.

That has prompted authorities to step up curbs this year, including restrictions on borrowing by developers, caps on banks' lending to the sector, guiding banks to raise mortgage rates and a crackdown on illegal funding in the market.

"In most cities, both newly built and resale homes have seen a clear slowdown in price growth," said Zhang Dawei, chief analyst with property agency Centaline.

"The housing price growth is expected to continue to soften, as the credit policy returns to normal, (from ease to tight)," Zhang said.

"The tight credit and continuing regulations to close loopholes (for speculation) is the key reason for the slowdown of housing prices", said Xu Xiaole, analyst at Beike Research Institute.

Last month, a top decision-making body of the ruling Communist Party repeated an earlier government warning that "homes are for living in, not for speculation".

Authorities in the southern tech hub of Shenzhen earlier this month said that US$332.46 million (2.155 billion yuan) of loans meant for business use had been unlawfully used for home purchases.

Price growth in China's biggest cities such as Shanghai and Beijing eased in July to 0.4 per cent from June's 0.7 per cent growth, the NBS said.

In Beijing, which has China's most stringent property curbs, residents are not allowed to buy additional homes after owning two properties.

Centaline's Zhang said authorities had slapped a record 380 new curbs on the sector this year.

Prices in smaller tier-three cities rose 0.2 per cent on-month, versus a 0.3 per cent gain in June. Tier-two cities, which include some provincial capitals, gained 0.4 per cent, slowing from June's 0.5 per cent rise.

In August, Jinhua, a small city in eastern Zhejiang province, and Huizhou, in southern Guangdong province, took action after the housing ministry told them to strengthen controls.

The softening has spread with 51 cities reporting month-on-month gains in July, the smallest number since January and down from 55 in June.

Compared with a year earlier, China's new home prices grew 4.6 per cent in July, down from a 4.7 per cent increase in June.

Source: Reuters/ng

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