China's Campaign to Cool House Prices Could Ease as Curbs Bite

Updated on
  • Developers’ stocks jump as home prices rise in fewer cities
  • Analysts speculate that further curbs may be limited

China's August Home Prices Rise in Fewer Cities

Home prices rose in fewer Chinese cities last month and declined in some of the nation’s hottest markets, signaling that authorities may be able to limit additional curbs to cool overheating.

New-home prices, excluding government-subsidized housing, gained in 46 of 70 cities tracked by the government in August, compared with 56 in July, the National Bureau of Statistics said on Monday. That was the smallest number of increases since January. Prices fell in 18 cities from the previous month and were unchanged in six.

Developers’ stocks rose on the prospect that Chinese leaders would feel less pressure to roll out additional property restrictions ahead of a twice-a-decade Communist Party congress slated to begin Oct. 18. Since last year, officials have imposed city-by-city curbs, seeking to rein in prices without triggering an industry slump that could undermine economic growth.

“Earlier concerns about possible policy tightening before the 19th Party Congress dissipated after data show less cities record home price increases in August, reducing the probability of further property controls,” said Toni Ho, an analyst with Rhb Osk Securities Hong Kong Ltd. “Investors have also been betting on strong sales in September which marks the start of the traditional peak season for home sales.”

Shares Surge

A Bloomberg Intelligence index tracking 22 leading property companies, mostly listed in Hong Kong, surged the most in a month, up 4.4 percent. Guangzhou R&F Properties Co. rallied as much as 10.8 percent, the most in almost two months.

Guangzhou, one of the nation’s biggest cities, finally joined Beijing, Shanghai and Shenzhen in reporting flat or declining prices. Guangzhou’s prices fell 0.7 percent after rising for 28 months. Values slipped 0.4 percent in Shenzhen, a bigger decline than a month earlier. Prices were unchanged in Beijing and Shanghai.

The largest drop was in the southern tourist city of Haikou, on the tropical island of Hainan, where home prices fell 1 percent, after the city previously stepped up home-buying curbs to ease speculation.

Home sales increased last month at the slowest pace in almost three years, according to data released last week. With credit tight, sales may soften further in the fourth quarter, Deutsche Bank AG analysts led by Hong Kong-based Jeffrey Gao wrote in a report before Monday’s numbers.

Companies such as Country Garden Holdings Co. last month raised sales targets for the year despite the government restrictions, which have included measures such as increased down-payment ratios for second homes. Country Garden shares rose as much as 6.8 percent in Hong Kong on Monday.

— With assistance by Emma Dong, and Amanda Wang

    Before it's here, it's on the Bloomberg Terminal.