Tightening policies slow down new home price growth in top tier cities

New home prices in China’s first and second-tier cities rose at a slower pace in July amid strictly enforced tightening policies, official data showed today.

On a month-over-month basis, new residential housing prices in China’s four first-tier cities edged up 0.2 percent in July, compared with a 0.6 percent gain in June, said the National Bureau of Statistics, which tracks housing price changes in 70 cities around the country.

Shanghai was the only city among the four that registered a monthly decrease. New home prices fell 0.1 percent in Shanghai last month, and climbed 0.2 percent, 0.6 percent and 0.5 percent in Beijing, Guangzhou and Shenzhen, respectively, according to the bureau’s data.

In the 31 second-tier cities monitored by the bureau, new home prices increased 1.1 percent from a month ago, compared with 1.2 percent growth recorded in June.

In contrast, new home prices in the 35 third-tier cities, most of which are still plagued by high inventories, rose 1.5 percent from a month earlier, accelerating from the 0.7 percent rise in June, the bureau’s data showed.

In the existing home market, housing prices in first, second and third-tier cities rose by 0.2 percent, 1 percent and 1.1 percent, respectively, from June.

“Differentiated policies to curb speculation continued to be adopted around the country in July as local governments worked hard to balance supply and demand for healthy development of the housing market,” said Liu Jianwei, senior statistician of the bureau.

On a year-over-year basis, new home prices in first-tier cities gained 0.2 percent while they climbed 7.3 percent and 6.7 percent, respectively, in second and third-tier cities, all accelerating from June.

Among the 15 “hotspot” cities, two registered month-over-month declines in new home prices, unchanged from June. Four cities posted year-over-year drops, a decrease of three from June, according to the bureau.

The central government has been vowing to tame housing price surges that fuel massive concerns about asset bubbles by implementing a slew of tightening measures, mainly including home purchase restrictions, higher down payment ratios and mortgage rates, as well as the introduction of a lockup period for home sales.

It also said that it will speed up its pace to build a long-term mechanism to promote the steady and healthy development of the housing market.

Nationwide, Sanya in south China’s Hainan Province recorded the biggest month-on-month increase of 3.7 percent in new home prices. It was most closely followed by Jinan in Shandong Province, where new home prices rose 3 percent from June.