Business / Industries

Home price growth slows in Oct, raising doubts about recovery

By Zheng Yangpeng (China Daily) Updated: 2015-11-19 07:52

China's home price rise slowed for the second straight month in October, according to government statistics.

Combined with slowing growth in home sales and declining growth in real estate investments, the result raises questions on whether the property market recovery since April has come to an end, analysts said.

New home prices rose in 27 cities of the total 70 tracked, compared with 39 in September, the National Bureau of Statistics said on Wednesday.

The average home prices in the 70 cities rose 0.07 percent in October from September. This is the slowest monthly gain since June, according to Bloomberg calculations based on official data.

Prices in Shanghai led gains in the first-tier cities, up 2.1 percent from the previous month, the quickest pace in four months. Prices increased 1.2 percent in Shenzhen, much slower than the 4 percent month-on-month gain in September. They gained 0.8 percent in Beijing and Guangzhou, both slower than in the previous month.

The slowdown in price rises was accompanied by slowdown in residential sales. In floor space terms, residential sales growth nationwide fell further in October to 5.9 percent year-on-year, from 8.8 percent in September, and a 15.6 percent surge in August.

"The consecutive two months of sales slowdown came during a season that traditionally saw robust sales. It raised the concern that whether this round of pick-up has already lost momentum as interest rate cuts and other easing policies have diminished effect," said Yan Yuejin, an analyst with E-house China R & D Institute.

Real estate investment, a traditional driver of China's GDP growth, saw its growth rate tumble from 12.4 percent just a year ago to a record low of 2 percent in the first 10 months of this year, despite the sales warm-up.

"There are signs of price gains losing momentum, fueling hopes that more stimulus, including tax breaks and down payment cuts, will come in the remainder of this year," said Guo Yi, market director of Yahao, a real estate consulting agency.

In a sign that the government is concerned about the situation and is considering more measures to stimulate the market, President Xi Jinping last week vowed to "reduce property inventory" and "promote the healthy development of the property market". This is the first time since October 2013 that the top leader commented specifically on the market.

China still faces a severe glut in new housing, as the number of unsold homes nationwide increased 14 percent over a year ago to 437 million square meters as of end-October: That translated to 0.32 square meters for every Chinese.

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