Housing Market Cools in July

Home prices increased 0.7 percent in July, same as June, but the number of cities with rising prices fell to 51, while the number of declining cities rose to 16.

The first tier cities did not see significant gains, while the hot second-tier galloped ahead. Xiamen new home prices climbed 4.6 percent; Hefei 4.2 percent; Nanjing 3.4 percent. Take these three cities out of the calculation and the remaining 67 cities saw prices rise 0.55 percent. Only 8 cities saw increases of more than 2 percent; the other five all are second-tier cities: Wuhan, Tianjin, Shijiazhuang, Hangzhou and Wuxi. Two more, Shenzhen and Zhengzhou, climbed exactly 2 percent.

Two of the formerly hot second tier cities cooled off substantially: Fuzhou and Huizhou increased 1.7 percent and 1.6 percent. Aside from the the three leaders, most cities cooled.

Year-on-year new home prices increased 6.1 percent. The comparisons become more difficult in the second-half because the housing recovery kicked off last summer.

Existing home prices rose in 51 cities, were flat in 7, fell in 12.

Existing home prices increased 0.5 percent mom and 5.0 percent yoy. Hefei, Nanjing and Xiamen led with increases of 3.2 percent, 3.1 percent and 2.4 percent.

Takeaway: the average price increase of new and existing homes was the same in July as in June, but the gains become more concentrated. The slowing in lending seen in June did have an effect, but it mainly hit the third- and fourth-tier cities where falling prices spread. The leading cities have recently implemented buying restrictions, with Nanjing the latest to hike down payments. The peak in monthly price gains is in, they will begin to shrink nationally in August as slowing sales and policy restrictions take effect. There has also been no shortage of warnings from analysts and official sources:

More Warnings of a Housing Turn
In China, They Do Ring a Bell at the Top
Ministry of Housing Says Cyclical Top Is In

NBS: 2016年7月份70个大中城市住宅销售价格变动情况

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