China’s home price inflation slowed for the second straight month in February, the latest sign of cooling in the country’s frothy property market due to government policy curbs and weaker domestic demand.
Average new home prices in China’s 70 major cities rose 8.7% in February from a year earlier, easing from the previous month’s 9.6% rise, according to Reuters calculations based on official data published on Tuesday. In month-on-month terms, prices rose 0.3% in February, slowing from January’s rise of 0.4%.
China’s red-hot property market has shown signs of losing steam since late 2013 as local governments took further tightening measures and banks gradually tightened lending to the sector.
A mild cooling in the market could be welcomed by the government, which has spent more than four years trying to tame rising home prices on concerns of an asset bubble.
An abrupt property slowdown, however, could add to concerns about bad debts and further weigh on the world’s second-largest economy, which slowed markedly in the first two months of the year.
State-owned China News Services reported on Monday that developer Zhejiang Xingrun Real Estate, based in eastern Zhejiang province, is on the brink of bankruptcy, owing 15 domestic banks 2.4 billion yuan ($388.5 million).
The National Bureau of Statistics said new home prices in Beijing rose 12.2% in February from a year earlier, compared with January’s year-on-year increase of 14.7%. Shanghai’s home prices were up 15.7% from a year ago, versus 17.5% annual growth in January.
Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, only giving home price changes in each of 70 major cities.
China’s property market has seen a divergence between big cities, where strong demand and short supply have pushed up prices rapidly, and small ones, where rises have tended to be slower on soft demand.
Home prices fell month-on-month in four of 70 major cities in February, monitored by the NBS, down from five in January.
Premier Li Keqiang has promised to employ differentiated property policies this year in different cities based on local conditions.
Official figures showed developers slowed their expansion pace at the start of this year, with floor space newly started for construction slumping 27.4% in January-February from a year ago, adding to caution about the outlook.
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