Investments

China’s cooling measures curb new residence value progress, property funding

The Taoyuan Xindu Kongquecheng condo compound developed by China Fortune Land Improvement is seen in Zhuozhou, Hebei province, China March 19, 2021. Image taken March 19, 2021. REUTERS/Lusha Zhang/File Photograph

  • On month-to-month foundation, new residence costs develop at slowest tempo since Dec
  • Annual new residence value progress slowest since January
  • Property funding sees smallest progress in 18 months

BEIJING, Sept 15 (Reuters) – China’s new residence costs elevated at their slowest tempo in a number of months as authorities stepped up efforts to rein in a red-hot property market, whereas cooling measures have been anticipated to restrict residence value progress going ahead.

Common new residence costs grew at their slowest tempo since December on a month-to-month foundation, and since January on an annual foundation, as authorities stepped up property curbs this 12 months, from capping banks’ lending to the sector to proscribing purchases.

The property market’s sharp rebound from the COVID-19 shock final 12 months has raised considerations about monetary dangers, however the array of tightening measures are taking a toll on the property sector, an important supply of Chinese language financial progress.

China’s property market can be grappling with widespread issues on the nation’s second-largest property developer China Evergrande Group (3333.HK), which is struggling to restructure a mountain of debt and keep away from a doable default. learn extra

Common new residence costs in China’s 70 main cities grew 0.2% within the month of August after rising 0.3% in July, based on Reuters calculations based mostly on information launched by the Nationwide Bureau of Statistics (NBS).

China’s new residence costs grew 4.2% in August from a 12 months in the past, versus a 4.6% improve in July.

Authorities have stepped up measures to rein in China’s property market this 12 months, together with caps on banks’ lending to the sector, higher limits on builders’ debt ratios and restrictions on purchases. Greater than 20 cities strengthened their curbs on the sector in August. learn extra

The measures have slowed property purchases whereas some builders are being arduous hit by the liquidity squeeze.

New residence costs in low-tier cities rose extra slowly than these in tier-one cities, however residence costs in considered one of China’s largest cities Guangzhou fell month-on-month for the primary time since March 2020.

“(The) property market has cooled considerably within the third quarter of this 12 months,” mentioned Yan Yuejin, director of the Shanghai-based E-house China Analysis and Improvement Establishment.

“The continual tightening of credit score insurance policies and the decline in transaction quantity have led to a transparent slowdown in value progress.”

The NBS information confirmed 46 out of 70 cities reported month-on-month features, down from 51 in July.

Property funding grew 0.3% year-on-year in August — its smallest progress in 18 months and down from a 1.4% improve in July, based on Reuters calculations based mostly on separate NBS information.

Nomura mentioned in observe that ongoing property curbs have been unlikely to be eased within the close to time period, as Beijing has “connected nationwide strategic significance to reining in property bubbles.”

“Housing value progress is predicted to decelerate sooner or later,” mentioned Zhang Dawei, chief analyst with property company Centaline.

“The variety of cities seeing a slowdown in costs progress will improve.”

Earlier this month, scores company Moody’s downgraded its outlook on China’s property sector to unfavourable from steady resulting from tighter entry to funding.

In an effort to ease housing woes of younger individuals, authorities have additionally elevated the provision of reasonably priced housing and moved to cap the price of residence leases for the primary time. learn extra

Reporting by Liangping Gao and Ryan Woo; Modifying by Ana Nicolaci da Costa

Our Requirements: The Thomson Reuters Belief Ideas.

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