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China home prices rise in fewer cities amid tougher curbs

Shanghai - China’s overheated property market is showing tentative signs of cooling, as authorities stepped up home-buying curbs to avert a housing bubble. 

New-home prices, excluding government-subsidized housing, gained last month in 63 of the 70 cities the government tracks, down from 64 in August, the National Bureau of Statistics said Friday. Prices dropped in six cities, compared with four a month earlier. They were unchanged in one.

The real estate market “apparently cooled” in October on targeted measures rolled out in first-tier and some second-tier cities, the statistics bureau said in a statement. New-home prices in Shenzhen, the nation’s hottest property market earlier in the year, fell 0.3 percent in the first half of October from a month earlier, the bureau said. Prices in some other cities declined between 1 percent and 3.8 percent, it said.

Local governments in at least 21 cities have in recent weeks introduced property curbs, such as requiring larger down-payments and limiting purchases of multiple dwellings in a bid to cool prices.

Beijing, Shanghai

New-home prices in Beijing fell 3.7% in the first half of October from September, the bureau said, after the municipality increased down-payments for first-time home buyers. Home prices in the capital jumped a record 4.9% in September, Friday’s data showed.

Prices in the financial hub of Shanghai fell 2.5% in the first two weeks of October, after jumping 3.2% in September.

A cooling in the property market may provide some relief to policy makers, who are seeking to avert a potentially ruinous housing bubble without killing one of the economy’s main pillars of growth.

A buoyant property industry helped the world’s second-biggest economy grow 6.7% in the third quarter from a year earlier, bang in the middle of the government’s 2016 goal of 6.5% to 7% growth.

“These curbs only aim to rein in the home-buying panic and to stem the bubble, instead of being an all-round shackling on the property market,” Wang Tao, chief China economist of UBS in Hong Kong, said before the data was released. “The possibility of a home-price plunge is low.”

The curbs introduced so far are likely to have only a mild impact, she said.

“The most powerful property control is credit tightening, which we haven’t seen,” Wang said. “The purchase restrictions currently imposed can still be bypassed.”

Lending rates

China has kept its benchmark lending rate unchanged since October last year after cutting rates rates six times in 11 months to, sending the benchmark mortgage lending rate to a historical low of 4.9% Medium- and long-term bank loans to households, mostly residential mortgage loans, surged a record 571.3 billion yuan in September, according to data from the People’s Bank of China.

The pace of home sales is also rising sharply. The value of new homes sold rose 61% in September from a year earlier, almost double the previous month’s gain, according to Bloomberg calculations based on data the National Bureau of Statistics released on Wednesday.

An October 1 report by SouFun, the owner of China’s biggest property website, showed prices in September gained in 81 of 100 cities tracked, up from 68 in August. Average new-home prices climbed 2.8%, accelerating from a 2.2% gain the previous month, the private data provider said.

The combination of higher prices and tougher curbs is sending more mainland buyers to consider purchasing property in Hong Kong, where prices are becoming “ relatively more affordable,” according to Bank of America Merrill Lynch.

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