China's red-hot housing market is now starting to cool

Photo by China Photos/Getty Images

Chinese new home prices continued to moderate in January.

According to China’s National Bureau of Statistics (NBS), prices rose by 0.2% in January, continuing the deceleration that began in the final quarter of last year.

They previously grew by 0.3% in December, and have now decelerated in each of the past four months.

Of the major cities, prices in Shenzhen, Shanghai and Tianjin fell by 0.5%, 0.1% and 0.3% respectively, offsetting growth of 0.6% and 1.3% in Guangzhou and Chongqing. Prices in Beijing, the Chinese capital, were flat.

As a result of the moderation in those larger centres, a result of tighter buying restrictions being introduced by policymakers to cool rapid price growth seen previously, the year-on-year increase slowed to 12.2%, down from 12.4% in December.

Annual growth is now clearly starting to roll over after hitting a cyclical peak of 12.6% in November.

Still, even with the recent slowdown, some of the gains in the past year have been enormous, with prices in Beijing, Shanghai, Tianjin and Guangzhou all growing by more than 23%.

Along with the introduction of tighter buying restrictions in more than 20 cities late last year, China’s government has said that it will promote stable and healthy development of the real estate market in 2017.

“Houses are built to be inhabited, not for speculation,” the government statement said, according to the Chinese state-run Xinhua newsagency.

It also said credit policy at the micro level should support the reasonable purchase of homes as residences and tightly restrict credit in speculation.

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