China December new home prices slow, private survey shows

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Prices of new homes in China rose at a slower pace in December, with tightening policies continuing to cool the market, a private survey showed on Friday, but price growth in 2020 still topped the previous year’s pace despite the coronavirus pandemic.

New home prices in 100 cities rose 0.25% in December from a month earlier versus a 0.32% gain in November, moderating for the second straight month, according to data from China Index Academy (CIA), one of the country’s largest independent real estate research firms.

China December new home prices slow, private survey shows

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More cities reported monthly gains, however, with the number climbing to 79 from 71 in November, and 19 cities saw lower home prices compared with 28 in the preceding month, the CIA data showed.

Dongguan and Guangzhou, two cities in the southern Greater Bay Area, led the price rises. While central and northern cities like Luoyang and Zhangjiakou saw the biggest monthly price drops.

“With the government’s market-cooling steps taking hold, the overall price gains remained on a mild level,” said Cao Jingjing, Research Director with CIA.

“The cooling growth is also weighed by deepening price drops in some smaller cities which saw a withered local economy and continued population outflow.”

On an annual basis, new home prices rose 3.46% in December, versus November’s 3.63% gain.

For the whole year of 2020, new home prices rose 3.46%, slightly more than 3.34% seen in 2019, the CIA data showed.

China’s property market has recovered quickly from the COVID-19 pandemic early last year, thanks to cheaper credit and looser purchase restrictions.

But with the economy nearly fully recovered to pre-coronavirus levels, policymakers have been turning their attention back to containing financial risks in the highly leveraged sector, ramping up scrutiny of financing activities of developers and buyers.

Land sales by volume rose 7% in 2020 from 2019, while the average transaction price per square metre rose 7% last year,buoyed by double-digit growth of land prices in tier-1 cities, separate CIA data showed.

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