- The market is likely to lose more momentum as developers offer big discounts to entice buyers, say analysts
- The data for August home prices still marked a 52nd straight month of gains, as the bull-run in the housing market stretches well into its fifth year
The Chinese government's efforts to take the heat out of the property market appear to be paying dividends, with new data pointing to a slowdown in price gains as a growing number of developers slashed their prices.
The price of new homes increased in 55 of 70 cities tracked by the National Bureau of Statistics in August, the lowest number in 18 months. Only 44 cities saw new-home prices increase in February last year.
The average cost of a new home rose by 0.58 per cent in August, the smallest increment in six months, according to calculations based on the data released on Tuesday. It was slightly lower than July's growth of 0.59 per cent, while prices grew 0.66 per cent in June.
Country Garden among property developers reporting slowdown
"Price increases are likely to be further narrowed as we've seen developers starting to offer discounts to woo buyers," said Yan Yuejin, a research director with Shanghai-based property services firm E-House China R&D Institute.
"And more cooling measures will kick in, and in some cities prices will go down."
Ten cities, including some major ones like Nanjing and Chongqing, have seen their new home prices reverse course from their June levels.
China Evergrande, the country's third-largest developer by sales, launched a two-month campaign on August 20 offering discounts of up to 22 per cent on 532 projects across the nation.
Other developers are providing discounts on individual projects in different cities. Country Garden, China's largest developer by sales, cut the prices of homes in its The Clouds project in Guangzhou by about 10 per cent.
Beijing piles pressure on Hong Kong developers
The fact buyers are now expecting further price cuts may actually deter them from taking the plunge right now, and will put pressure on home sales in the coming months, analysts said.
China is likely to see close to zero growth in new home sales, said Tommy Wu, senior economist at Oxford Economics.
The data for August home prices still marked a 52nd straight month of gains, as the bull-run in the housing market stretches well into its fifth year.
The central government has insisted that housing must not be used as a tool to stimulate the slowing economy.
It has introduced as many as 367 new regulations in the first eight months of this year across the country, including caps on home and land prices and tighter credit controls, according to Centaline Property.
The banking regulator " the China Banking and Insurance Regulatory Commission " has instructed lenders to closely scrutinise loans going into the real estate sector. That includes loans to developers and mortgages for buyers, the state-run Xinhua News Agency reported on August 10.
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