China house price growth seen slowing to 2% in 2017

BEIJING: China’s house price growth will slow significantly on continuing government curbs and tighter credit conditions this year, dampening land sales that hit record highs in 2016, but views diverge on whether prices will correct sharply, a Reuters poll showed.

Home prices across the nation are expected to rise a median 5% in the first half of the year and 2% for the full year, the poll estimated. Analysts expect a lag between official tightening steps and the deceleration in price growth.

Prices of new homes in China surged 12.4% last year, the fastest rate since 2011, prompting more than 20 cities to introduce property curbs to cool the market since October.

The red-hot land market, widely regarded as one of the main reasons for a sharp rise in house prices last year, is also seen coming off the boil this year as developers’ financing channels, such as property bond issuance, have also been tightened.

Most analysts expect Beijing’s cautious policy tone and tighter credit conditions to continue to weigh on the property market this year, as Chinese leaders have pledged to stem the growth of asset bubbles and prevent financial risks in 2017.

Despite a more bearish view of the property market, only three of 11 analysts polled predicted that prices would fall this year.

Inventories remain low in the biggest cities and cash-rich developers who made lucrative profits last year have little incentive to lower prices on new units, analysts said.

But half of those polled said some second-tier cities could be at risk of a sharp price correction. – Reuters

China , poll , property