Rise of China’s home prices curbed for now

Residential property prices in China have continued to rise in August, but at a slower pace. Could this be a sign that the curbs implemented by the Chinese government over the past year or so have finally worked?

Restrictions on real estate market effective

Over the past year, 45 major cities in China have implemented curbs on the housing market. While the policies differ from city to city in terms of severity, the average new home prices in 70 major cities have risen only 0.2% last month. This is half of the rate of increase in July, according to the National Bureau of Statistics (NBS).

Turning point for Tier-1 and Tier-2 cities

Across China’s 15 most popular markets, prices have stabilised sans monthly increases. Property analysts consider this a turning point in particular for the Tier-1 and Tier-2 cities. Even the shares of Chinese property developers have responded positively after the news. Home prices in Shenzhen fell 1.9% over the past year but in Shanghai and Beijing, prices continue to rise by 2.8% and 5.2% respectively.

A promising result of the restrictions are that investors are feeling more confident and comfortable with the current status of the real estate sector. There seems to be no immediate need to intensify controls. Though the tune may change as speculators are now turning their attention to smaller cities with fewer curbs.