NEW home prices in China grew at their weakest pace in nearly two years in November while property investment also eased, with tightening policies continuing to cool the market even as some local easing is expected to prevent a sharp slowdown.

Average new home prices in China’s 70 major cities rose 0.3 percent in November from the previous month, lower than the 0.5 percent growth reported in October and the weakest since February 2018, showed media calculations from the National Bureau of Statistics (NBS) data yesterday.

On an annual basis, average new home prices in the 70 cities rose 7.1 percent in November, down from 7.8 percent in October and the slowest year-on-year pace since August 2018.

Most of the 70 cities surveyed still reported monthly price increases for new homes, but the number was down to 44 from 50 in October.

China has clamped down on property speculation since 2016 to stop prices rising too quickly. It has tightened domestic and onshore financing for the sector, and kept downpayment requirements high for individual buyers.

Analysts noted some developers will likely ramp up sales promotions and slash prices toward the end of this year to secure revenue.

Price trends have remained mixed, with some cities showing signs of rapid cooling while others remain vulnerable to overheating.

Price growth in China’s four top-tier cities – Beijing, Shanghai, Shenzhen and Guangzhou – rose 0.6 percent from a month earlier, quickening from a 0.1 percent gain in October, the statistics bureau said in a statement accompanying the data.

Tier-2 cities, which include most of the larger provincial capitals, increased 0.2 percent in November on a monthly basis, compared with a 0.5 percent gain in the previous month.

Tier-3 cities rose 0.5 percent, slower than October’s pace.

Separately, official data yesterday also showed China’s real estate investment in November grew 8.4 percent from a year earlier, down from October’s 8.8 percent and the weakest pace in nearly a year.

Property sales by floor area, a key barometer of demand, rose 1.1 percent year on year in November, the lowest since June when transactions fell 2.2 percent, media calculations showed.

The month also saw new construction starts measured by floor area declined 2.9 percent from a year earlier, the worst data seen in more than two years. That compared with a jump of 23.2 percent in October.

Funding pressure is likely to persist. More than 450 property developers went bankrupt as at the end of November this year, topping the total number last year, Economic News Daily reported, citing market data.

“Developers normally are less active in kicking off new projects towards the end of a year, instead they focus more on promoting sales to collect cash to embellish their financial statements,” said Hui Jianqiang, a researcher with China Real Estate Appraisal.

“We expect new construction to recover somewhat in spring next year as weather gets warm, but pessimistic sentiment in the market would remain as there’s no sign of a broader loosening in policy.”

China’s house prices are expected to grow 3.1 percent next year, the lowest over a calendar year since 2015, a recent poll showed.(SD-Agencies)