Tighter China rules see new home price growth at slowest since 2016

Average new home prices were up just 0.4 percent across China’s 70 largest cities in September, having grown 0.6 percent in August, data showed. (AFP)
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Updated 21 October 2020

Tighter China rules see new home price growth at slowest since 2016

  • Average new home prices in 70 major cities across China rose 0.4 percent in September from a month earlier

BEIJING: New home prices in China grew at their slowest pace in over four and a half years as tightening measures in some big cities helped cool the property market despite a broader economic recovery.

New home prices in China also grew at a slightly slower monthly pace in September, official data showed, while the number of cities reporting monthly price increases for new homes fell.

A recovery in China’s property market has provided much-needed support to an economy hard-hit by the coronavirus earlier this year. But policymakers have rolled out new restrictions in recent months on concerns of a potential market bubble.

“The broad tightening of housing policies since July has had an impact on home prices data,” said Zhang Dawei, a Beijing-based analyst with property agency Centaline.

Average new home prices in 70 major cities rose 0.4 percent in September from a month earlier, compared with a 0.6 percent increase in August, according to Reuters calculations based on data released by the National Bureau of Statistics.

On an annual basis, home prices rose 4.6 percent in September, the slowest pace since February 2016, and versus a 4.8 percent expansion in August. More than 20 cities have imposed new rules since July to prevent sharp price rises, while regulators have introduced stringent rules to contain property developers’ debt levels.

In September, many developers moved to cut prices to attract buyers ahead of the eight-day National Day holiday.

“The softening growth is also due to an increase in supply as developers ramped up sales promotion during the traditionally peak season,” Zhang added.

As China’s recovery solidifies, economists say policymakers will be watching home prices closely and will tweak rules as necessary.

Real estate investment in China rose at the fastest pace in nearly one and a half years in September. Household leverage ratio meanwhile soared to a record in June, threatening to hobble private consumption, a key source of growth.

The NBS data on Tuesday also showed the number of cities reporting monthly price increases for new homes fell to 55 out of 70 from 59 in August. Tier-3 cities reported the strongest monthly gains.

China’s home prices are expected to rise 4.8 percent this year, a Reuters survey showed in late September, at a slower pace than last year, as Beijing shifts to deleverage the sector.

US sanctions Chinese and Russian firms over Iran trade

Updated 29 November 2020

US sanctions Chinese and Russian firms over Iran trade

  • Four companies accused of ‘transferring sensitive technology and items’ to missile program

LONDON: The US has slapped economic sanctions on four Chinese and Russian companies that Washington claims helped to support Iran’s missile program.

The four were accused of “transferring sensitive technology and items to Iran’s missile program” and will be subject to restrictions on US government aid and their exports for two years, Secretary of State Mike Pompeo said in a statement.

The sanctions, imposed on Wednesday, were against two Chinese-based companies, Chengdu Best New Materials and Zibo Elim Trade, as well as Russia’s Nilco Group and joint stock company Elecon.

“These measures are part of our response to Iran’s malign activities,” said Pompeo. “These determinations underscore the continuing need for all countries to remain vigilant to efforts by Iran to advance its missile program. We will continue to work to impede Iran’s missile development efforts and use our sanctions authorities to spotlight the foreign suppliers, such as these entities in the PRC and Russia, that provide missile-related materials and technology to Iran.”

The Trump administration has ramped up sanctions on Tehran after withdrawing from the Iran nuclear deal in 2018.

Earlier this week, Pompeo met Kuwaiti Foreign Minister Sheikh Ahmad Nasser Al-Mohammad Al-Sabah, when the campaign of pressure on the Iranian regime was also discussed.

“I want to thank Kuwait for its support of the maximum pressure campaign. Together, we are denying Tehran money, resources, wealth, weapons with which they would be able to commit terror acts all across the region,” he said.

It is not yet clear how the incoming administration of Joe Biden will deal with Tehran and whether it wants to revive the nuclear deal which would be key reviving the country’s battered economy. The Iranian rial has lost about half of its value this year against the dollar, fueling inflation and deepening the damage to the economy.

Iran’s economy would grow as much as 4.4 percent next year if sanctions were lifted, the Institute of International Finance (IIF) said last week. 

The economy is expected to contract by about 6.1 percent in 2020 according to IIF estimates.