China’s new home prices grow at slowest pace in eight months on cooling measures

imageEconomy18 minutes ago (Sep 14, 2021 10:26PM ET)

(C) Reuters. FILE PHOTO: The Taoyuan Xindu Kongquecheng apartment compound developed by China Fortune Land Development is seen in Zhuozhou, Hebei province, China March 19, 2021. Picture taken March 19, 2021. REUTERS/Lusha Zhang/File Photo

BEIJING (Reuters) -China’s new home prices grew at their slowest pace in eight months in August, official data showed on Wednesday, as a slew of measures to cool the country’s red-hot property market took a toll on demand in the world’s second-largest economy.

Average new home prices in China’s 70 major cities grew 0.2% month-on-month in August after increasing 0.3% in July, according to Reuters calculations based on data released by the National Bureau of Statistics (NBS).

Compared with a year earlier, China’s new home prices grew 4.2% in August, down from a 4.6% increase in July. It was the slowest year-on-year growth since January.

Authorities have stepped up measures to rein in China’s red-hot property market this year, including caps on banks’ lending to the sector, upper limits on developers’ debt ratios and restrictions on purchases.

In August, more than 20 cities, including Beijing and the southern city of Dongguan, strengthened their curbs on the sector, including home purchase restrictions and caps on prices for reselling.

The measures slowed property purchases while some developers have been hit hard by a squeeze in liquidity.

The NBS data showed 46 out of 70 cities reported month-on-month gains, down from 51 in July.

Earlier this month, ratings agency Moody’s (NYSE:MCO) downgraded its outlook on China’s property sector to negative from stable due to tighter access to funding.

Authorities have also increased the supply of affordable housing and moved to cap the cost of home rentals.

The cost of renting a home in cities should not rise by more than 5% a year, said Vice Housing Minister Ni Hong on Aug. 31, the country’s first move to cap rental prices.

China’s new home prices grow at slowest pace in eight months on cooling measures

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