China's red-hot property market in major cities has shown signs of cooling after authorities stepped in with a spate of measures to contain sky-high prices, an official survey showed Friday, citing fresh data for the first half of October.
Drastic price rises in 15 first- and second-tier cities have been "markedly contained" by policies to curb property price growth, according to the National Bureau of Statistics (NBS).
Compared with September, the month-on-month price index for new residential property in those cities retreated this month, even though most of the cities still reported rises.
In Beijing and Shanghai, home prices went up 1.2 percent and 0.7 percent, respectively, for the first half of this month, moderating from the 4.9-percent and 3.2-percent gains seen in September.
Sales also slumped. Compared with the latter half of September, sales volume in four cities dropped between 60 to 80 percent in the first half of this month.
The NBS attributed the "positive changes" to local government's property curb policies. Over the week-long National Day holiday, dozens of Chinese cities announced measures, including purchase limits and tightened mortgage restrictions, to prevent prices from rising out of control.
Of 70 large and medium-sized cities surveyed in September, 63 saw new home prices climb month on month, Friday's data showed.
The latest round of property restrictions came after two years of progressive policy easing, starting with the relaxation of purchase restrictions in 2014. The momentum was further fueled by the government's pro-growth policies, including interest rate cuts and lower deposit requirements.
The sector's recovery, however, has been uneven from city to city, with economically strong areas reporting drastic price rises, and less developed areas still reporting huge inventories of unsold houses.
While the property recovery has proved to be a significant growth driver so far, policymakers have to walk a fine line to guide market expectations, since either an asset bubble or a sharp correction could increase risks to the broader economy.
Official data on Wednesday showed China's economy grew 6.7 percent in the third quarter, holding steady from the second quarter and putting the government on track to hit the full-year target of between 6.5 and 7 percent.
In the short-term, the biggest unknown remains the effect the government's efforts to rein in home prices will have on growth, as the property sector affects industries ranging from construction and cement to furniture.
Overall property market sentiment and demand were strong before recent tightening measures took effect, and some of this demand will likely be released, UBS China economist Wang Tao noted, adding sales growth is expected to decelerate but not contract in the next couple of months.
Given policymakers' recent concerns about a property bubble and rising leverage, along with the fact that this year's GDP target looks set to be met without much need for additional quasi-fiscal support, no notable credit acceleration or interest rate cuts are expected by year end, the economist added. （Updated）
