Home Prices in China’s First-tier Cities Slide in August


The latest official data points to a slide in housing prices for China’s first-tier cities, as authorities continue to apply strict policy controls to overheating urban property markets.

Figures released by China’s National Bureau of Statistics for a total of 70 cities indicates that 15 first-tier and hot-spot second tier cities saw new commercial apartment prices fall or remain flat compared to the preceding month, as well as declines in year-on-year rates of increase.

According to Liu Jianwei, senior statistician with NBS, initial surveys indicate that first-tier  city new commercial apartment and second-hand home prices saw a month-on-month decline of 0.3% in August.

New commercial apartment and second-hand home prices for second-tier cities posted increases of 0.2% and 0.3% respectively in August, for a slowdown in growth compared to the preceding month of 0.2 and 0.1 percentage points.

In third-tier cities new commercial apartments saw month-on-month gains of 0.4%, for a deceleration of 0.2 percentage points, while second-hand home prices rose by 0.4%, remaining on par with July.

NBS data further indicates that the year-on-year rate of increase in home prices for first and second-tier cities continues to slow.

Year-on-year price growth for new commercial apartments and second hand housing in first-tier cities has eased for the 11th consecutive month, falling 3.8 and 3.7 percentage points respectively in August compared to July.

For second-tier cities August marked the ninth consecutive month of easing year-on-year growth in new commercial apartment prices, with a decline of 1.6 percentage points in August, while second-hand housing saw its 7th consecutive month of easing, with a fall of 1.0 percentage points.

Yan Yuejin from the Shanghai E-house Real Estate Research Institute said that the housing price index for first-tier cities has just seen its first month-on-month decline month-on-month decline in 29 months, which is an extremely important signal and strongly indicates that current urban housing price bubbles are coming under constant pressure.

Centaline Property’s Zhang Dawei said that China’s recent nationwide tightening of loan extension was capping gain in investment demand, while July and August are traditional slow seasons, further exacerbating policy effects and leading to an overall easing of price increases.

Zhang notes that since March of this year municipal authorities around China have employed a total of five policy tools, consisting of restrictions on prices, purchases, loans, sales and commercial transactions, to contain overheating urban property markets.

According to Zhang the heavy policy controls applied for the past six months to 15 hot spot cities are finally proving effective, resulting in the first widespread home price decline.