In part because of government administrative measures deemed unfavorable to the real estate market by many analysts, China’s property market slowed in June 2017 with prices in top-tier cities like Beijing falling for the first time since February 2015.
Basing its calculations on an official survey issued by the Chinese National Bureau of Statistics (NBS), Reuters found out that new home prices remained stable with a 0.7 percent increase in June 2017 while average home prices in China’s 70 major cities rose 10.2 percent year-on-year in June 2017, decelerating by 0.2 percentage points from the previous month.
The cooling trend could be holding long-term financial relevance since China’s growing property market has been a strong source of the country’s economic growth. Overall, the real estate sector accounts for almost 28% of China’s GDP, up from 10% a decade ago.
Fearing a financial crisis after housing prices quickly soared especially in big cities like Beijing, Shanghai and Shenzen, the government has opted for control over sales prices for new units with a view to stabilizing the real estate market. Despite such measures, real estate investment and sales kept growing in smaller cities, making several analysts think that the slight slowing in prices growth constitutes a healthy development that could be a buy opportunity.
For others the China housing bubble keeps growing and government restriction failed to prevent it from expanding. Indeed many local governments would be relying on land sales to fund themselves, therefore undermining the property prices controls.