By Yawen Chen and Ryan Woo
PEKING (Reuters) – China's new real estate prices grew at their weakest pace in nearly a year in August, as the slowdown in the economy and existing speculation constraints weighed on aggregate demand. [1
On a monthly basis, average new house prices rose 0.5% in August, less than in July (0.6%) and the lowest since February. However, it was still the 52nd consecutive month of growth.
Most of the 70 cities surveyed by the NBS continued to announce monthly increases in new housing prices, although the number dropped from 60 in July to 55.
sector has asserted itself as one of the few bright spots in the world's second largest economy.
China's real estate investments grew fastest in August, as opposed to a continued slowdown in Monday's industrial output and investment.
However, some analysts said the recovery in investment is likely due to developers rapidly meeting government requirements before they can start selling in the face of growing funding pressures and concerns about the market outlook as regulators clarified have that only supervision is provided tightening.
Yang Yewei, a Beijing-based analyst at Southwest Securities, noted that some developers have opted for price cuts, although government scrutiny over new launches suggests that this would not be a big discount.
A resilient housing market has given some cushion to the world's second-largest economy as policymakers in an escalating trade war with the United States seek to restore declining consumer confidence.
] However, regulators are at stake as fast-growing household debt and ever-increasing real estate prices also heightened fears over a sudden market correction and housing affordability concerns. Leading Chinese politicians announced in July that they will not use the real estate market as a short-term incentive when it comes to pumping more loans into other sectors of the economy.
"The political impact of this meeting was in full swing in August," said Xia Dan, an analyst at the Chinese Communications Bank.
Slower price increases may give the authorities air as they refrain from stimulation Nomura's economists, however, expect some tightening measures to be eased towards the end of 2019 as the economic slowdown intensifies.
"Any attempt to stabilize growth by throttling lending to the real estate sector could fail," they said. The sector accounts for about a quarter of China's GDP.
Lately, the price trends have been mixed. Some cities have shown signs of rapid cooling, while others are still plagued by overheating risks.
Prices were mainly lower in August In Tier 2 cities, which include most of the larger provincial capitals.
Housing prices rose by an average of 0.5% per month, after having risen by 0.7% in the previous month, the statistics office said in a statement with Die Daten.
Nanning, the capital of the Guangxi Zhuang Autonomous Region in southern China, was the best monthly price, rising by 2.3% per month.
China's four top tier cities – Beijing, Shanghai, Shenzhen and Guangzhou – recorded a month-on-month average growth of 0.3%, unchanged from the previous month.
Of the 70 major cities, the government records price growth The smallest Tier 3 cities rose the most each month, although their 0.7% increase was also in line with July.
China's average residential real estate prices are expected to rise 6% year-on-year by 6% in 2019, according to a Reuters survey published in August. The forecast was slightly higher than the 5% predicted in the last survey in March, but is much slower than the 9.7% increase in 2018.
(Additional coverage by Lusha Zhang, Edited by Jacqueline Wong )