China's housing price rises slowed in January and February, the first slowdown in 14 months. This suggests that the Chinese government’s efforts to cool the property market over the past four years are finally showing results.
However, this "cooling" is only a slowing of price rises - i.e., residential property prices are still rising at a rapid rate.
Average new home prices in China’s 70 major cities rose 9.6% in year-on-year to January, easing from the previous month’s 9.9% rise. Prices in Beijing rose 14.7% year-on-year to January, compared with a 16% increase in December, according to data released by the National Bureau of Statistics.
“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,” Liu Jianwei, a senior statistician at the National Bureau of Statistics, said in a statement accompanying the data.
“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,” the statistician added.
Adding force to the NBS’s data, two private surveys show similar trends for February.
Prices of new homes in 288 major cities rose 9.08% year-on-year to February, down from January's annual rise of 9.39%, according to E-House China - the slowest gains for 10 months.
China Real Estate Index System (CREIS)'s survey showed prices rose 10.8% in February from a year earlier, easing from 11.1% annual gains in January.
Since April 2010, China has imposed a slew of measures to cool property prices, amid fears of a property bubble. The measures include higher down payments, limits on the number of houses that people can buy, the introduction of a property tax in Shanghai and Chongqing, and the construction of low-income housing.
China's central government last year told local governments to take firm measures. In response, Shanghai told banks to stop issuing loans for third home purchases. Beijing announced that single residents would be allowed to purchase only one home.
The easing has raised fears of a slowdown in GDP growth, as China's housing market and property lending are crucial to the national economy.