BEIJING • China's overheated property market is showing tentative signs of cooling, with home prices in some of the hottest cities falling this month as the authorities step up curbs to avert a potentially ruinous housing bubble.
New-home prices in Beijing fell 3.7 per cent in the first weeks of this month from last month, and dropped 2.5 per cent in Shanghai, the National Bureau of Statistics said yesterday. It added that the market "apparently cooled" due to targeted measures in some cities.
Still, average new-home prices in 70 cities tracked surged the most in more than seven years last month, climbing 1.8 per cent from August, according to Bloomberg calculations based on the data.
Local governments in at least 21 cities have introduced property curbs, such as requiring larger downpayments and limiting purchases of multiple dwellings, in a bid to arrest runaway prices. Even with some markets cooling, policymakers have a long way to go before they can claim victory in averting a bubble without killing one of the economy's main pillars of growth.
"The curbs will show their effect in the initial two to three months but, in the longer term, idle capital will still likely flow to property in the largest hubs as 'safe-haven' assets," said Bank of Communications analyst Xia Dan. The impact of the curbs will gradually abate as "liquidity is so abundant in a credit binge", she said.
It was the first time the statistics bureau had released figures for the current month, and they showed a marked turnaround from last month, suggesting moves to clamp down on the property frenzy may have had the unintended effect of stoking an already red-hot market by prompting a rush of buying before further restrictions were imposed.
Prices in Beijing jumped a record 4.9 per cent last month, yesterday's data showed. On Sept 30, the local government increased downpayments for first-time buyers to 35 per cent, the highest among the nation's biggest cities. In Shanghai, prices rose 3.2 per cent last month.
Across China, new-home prices, excluding government-subsidised housing, gained last month in 63 of the 70 cities tracked, down from 64 in August. Prices dropped in six cities, compared with four a month earlier, and were unchanged in one.
China has kept its benchmark lending rate unchanged since October last year, after cutting rates six times in 11 months. Medium- and long-term bank loans to households - mostly residential mortgage loans - surged. The pace of home sales is also rising sharply.
A buoyant property industry helped the world's second-biggest economy grow 6.7 per cent in the third quarter from a year earlier.
The combination of higher prices and tougher curbs is sending more mainland buyers to consider purchasing property in Hong Kong, said Bank of America Merrill Lynch.