Home Price Decline Decelerates in August

In August, new home prices fell 0.59% on average. Prices fell an average of 0.8% in July, and 0.5% in June. There were larger price gains at the top and larger declines on the bottom, while in the middle home price declines moderated slightly.

One of the most important cities is Hangzhou. It lifted some buying restrictions at the end of July, but home prices fell 1.81% in August versus 1.53% in July. The initial easing of restrictions was for larger homes, which the government data will break out. However, prices declines have been stronger on the more expensive properties so this initial data appears to match the sentiment among real estate agents.

Aside from the slowing decline in new home pries, existing home prices also firmed, with two major cities seeing gains (Wuhan & Chengdu) and a third flat (Tianjin). Last month, only Chongqing saw a bounce in existing home prices among the ten major cities.

Whether this holds is the big question. Markets don't go down in a straight line and aside from the lifting of buying restrictions in many cities, August is an overall slow month. Developers kept their powder dry waiting for September. Now more cities have eased buying restrictions, lifting them completely at the end of August. It's easier now to look at the cities that haven't lifted restrictions: the first-tier big 4, along with Zhuhai, Sanya, Nanning, Xining and Lanzhou. The first-tier cities will not lift restrictions. Nanning and Xining saw price increases in August, while Zhuhai and Lanzhou saw modest declines. Sanya saw a major decline of more than 3% month-on-month, worse than the 2.76% decline in July. If any city is next to lift restrictions, it is likely Sanya.