Is China’s red-hot housing market finally beginning to cool down?
In China’s housing market — just like in its overall economy — any signs of slower rates of growth are notable. Thanks in part to action by China’s central bank to curb lending, home price growth slowed for the first time since 2012, Reuters reports:
China’s home price rises eased for the first time in 14 months in January, the latest sign that the government’s more than four-year campaign to rein in property risk may finally be starting to bite.
Average new home prices in China’s 70 major cities rose 9.6 percent in January from a year earlier, easing from the previous month’s 9.9 percent rise, according to Reuters calculations based on data released by the National Bureau of Statistics (NBS) on Monday..
House prices in China have surged in the past year but the market began to show signs of losing momentum at the end of 2013 as local governments took further tightening measures at the prompting of a central government worried about the risk of an asset bubble.
In the past few years, it’s been increasingly popular to call China’s housing market a bubble. In October, the FT’s Simon Rabinovitch wrote For the economy, wrote that “the fear is that China is in the middle of a property bubble that will eventually burst and trigger a financial crisis.”
Beyondbrics compiled the below chart, which is a good indication of the sheer pace of the property price increases that China has seen in the last year or so. The below compares year-over-year price growth in March and September 2013. The September numbers, Beyondbrics suggests, likely reflects the impact of a July effort to boost the economy by China’s central bank: