China’s new home price growth slows as big cities decline

Home price growth began to slow in the second half of 2017 as the Chinese government sought to deal with bubbles in its property markets, following almost two years of rapid expansion. (Reuters)
Updated 19 March 2018
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China’s new home price growth slows as big cities decline

China’s new home price growth slowed in February from the previous month as a raft of government curbs aimed at tempering speculative demand softened prices in the biggest cities, although strength seen in smaller centers remained intact.
Average new home prices in China’s 70 major cities rose 0.2 percent in February from the previous month, compared with an increase of 0.3 percent in January, Reuters’ calculations from National Bureau of Statistics (NBS) data on Monday showed.
Compared with a year ago, they rose 5.2 percent in the month, picking up from a 5.0 percent increase in January.
Prices fell in China’s top-tier cities after they stabilized in January, the NBS said in a statement accompanying the data, without giving a specific figure.
Shenzhen’s new home prices fell 0.6 percent month-on-month, after it stabilized in January. Beijing prices declined 0.3 percent after posting a 0.2 percent increase in the previous month, data showed.
“I think the policies currently in place (to curb speculation) are effective in a way that they made prices fall slightly in prime markets,” said ING economist Iris Pang.
“But they also result in a spillover effect that drives buyers who can’t afford in those big cities to less expensive markets, which will continue to push up prices,” she said, adding that she doesn’t expect significant price falls in the biggest cities, despite the curbs.
The majority of the 70 cities surveyed by the NBS still reported monthly price increases for new homes although the number has dropped from the previous month. Forty-four cities reported higher prices in February, down from January’s 52.
The declines in the four top-tier cities contrast with a steady rise in prices in China’s vast spread of smaller cities. The fastest price gain was seen in Nanchong, a lower-tier city of about 6 million in Southwestern China’s Sichuan province, where values of new homes rose 1.7 percent on-month in February.
Price growth in tier-3 cities in general was unchanged from January, the NBS said, without giving details.
China removed sales prices for affordable housing in its January calculations, which prevents like-for-like comparisons with growth data before 2018.
Home price growth began to slow in the second half of 2017 as the government sought to deal with bubbles in its property markets, following almost two years of rapid expansion.
Property sales have shown signs of easing in recent months despite expectations of a spike in demand as developers ramp up promotions during the week-long Lunar New Year holidays when migrant workers head home.
But analysts have remained optimistic about demand in smaller tier-3 and tier-4 cities thanks to favorable government policies aimed at reducing inventories.
Authorities are seeking to balance attempts to support real economic activity with efforts to rein in risks from an increasingly complex financial system.
Household loans — mainly mortgages — increased by 275.1 billion yuan in February, well below expectations and sharply down on January’s record of 901.6 billion yuan.
Policymakers have vowed to push the stable and healthy development of the property market this year, emphasizing that homes are for living in, not speculative investment.
China will focus more on providing affordable housing and developing the rental market, Premier Li Keqiang announced earlier this month.
The country is also steadily pushing for a property tax law this year and expect it completed by 2020.


Saudi Aramco aims to buy controlling stake in SABIC — sources

Updated 41 min 37 sec ago
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Saudi Aramco aims to buy controlling stake in SABIC — sources

  • Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals firm, has a market capitalization of 385.2 billion Saudi riyals
  • The potential acquisition would affect the time frame of Aramco’s planned initial public offering set for later this year

DUBAI: Saudi Aramco aims to buy a controlling stake in petrochemical maker SABIC, possibly taking the entire 70 percent stake owned by Saudi Arabia’s sovereign wealth fund, two sources familiar with the matter told Reuters.
Late last week Aramco confirmed a Reuters report that it was working on a possible purchase of a “strategic stake” in Saudi Basic Industries Corp. (SABIC) from the Public Investment Fund, the kingdom’s top sovereign wealth fund.
Aramco’s initial thinking is to buy the full stake owned by the Public Investment Fund (PIF), but if that fails to materialize Aramco could end up with a stake in SABIC of more than 50 percent, making it a majority owner, the sources said.
No final decision has been made on the size of the stake as the discussions are still at a very early stage, they added.
Aramco declined to comment. The PIF did not respond to a Reuters request for comment.
Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals firm, has a market capitalization of 385.2 billion Saudi riyals ($103 billion).
The potential acquisition would affect the time frame of Aramco’s planned initial public offering set for later this year, the state oil giant’s chief executive, Amin Nasser, said in a TV interview on Friday.
Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.
Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from around 5 million bpd now, and double its petrochemicals production by 2030.
Aramco, the world’s largest oil producer, pumps around 10 million bpd of crude oil.