China warns speculators there will no 'reignition of house prices'

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  • While Chinese stocks are plunging, Chinese property prices are going in the other direction, and fast.
  • New home prices grew by 7.9% in the year to September, including 0.9% over the month.
  • China’s government, through the state-run Xinhua news agency, has told speculators to “lose the illusion” that “there will be a reignition of house prices”.

While Chinese stocks are in the midst of an ugly bear market, the same can’t be said for China’s housing market, at least according to official data from the government.

They’re still continuing to climb, defying a raft of policy restrictions rolled out to prevent a potential housing bubble.

According to China’s National Bureau of Statistics (NBS), new home prices in 70 major cities across the country rose by 0.9% in September, leaving the 7.9% in the year to September, the fastest annual since August 2017.

The continued upswing in prices, already from an elevated base following strong growth in prior cycles, suggests that some Chinese investors are looking to escape the carnage in stocks by plowing their capital into property.

Several cuts to the required reserve ratio for Chinese lenders this year may also be a factor.

However, for those looking to speculate on the future direction of prices, the Chinese government, courtesy of the state-run Xinhua news agency, has a warning for you: don’t bank on buying and selling restrictions being watered down anytime soon.

“Speculative buyers, land revenue addicts, and even the entire society need to recognise the general trend and lose the illusion that the regulation will be relaxed due to the downward pressure on the economy, that there will be a ‘reignition’ of house prices,” Xinhua said, according to a report from Reuters.

“[We] will not allow any relaxation of regulatory policies that are already established, nor allow house prices to rise.”

The Xinhua report said policymakers were also studying whether a nationwide property tax should be implemented, an idea that has been floated, and subsequently postponed, on several occasions in the past.

Reuters has more here.

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