China’s home prices reached the lowest ever since the last ten months putting more pressure on the economy. The slowing economy and weakening property investment is the reason behind this.
As per Reuters reports, the average home prices in 70 main cities of China showed a 0.6% gain in January, which reduced to 0.5% in February. This was found to be the lowest since April 2018. However on an annual basis, the home prices saw a rise of 0.4% in February from its value of 10.0% in January. Though, most of the 70 cities reported a monthly price rise in new homes, their number dropped to 57 from 58 in the month of January.
China’s major top tier cities namely Beijing, Shenzhen, Shanghai and Guangzhou, saw a drop in price rise from 0.4% gain in January to 0.3% in February. The two-tier cities saw a 0.7% increase in February compared to last month’s statistics. Most of the larger provincial capitals are included under this category and in three-tier cities they rose by 0.4%.
The latest data has shown that the property investment in China has showed a quick rise over the January- February period. The residential investment has been badly affected by the Sino-US trade disputes which have in turn resulted in a cooling economy.
China, the second largest economy in the world, has seen a three- decade low in its growth last year. The tariff issues with the US are one reason to blame for this. Policy makers are trying hard to avoid having a sharp thump to real estate as they will have their direct influence on other 40 business sectors of the country and this will further lead to greater slowdown in economy. Policy makers are trying to keep away property speculators to make sure that the first home purchasers are not bottomed out completely from the market. As per the central bank data, new household loans, which includes mainly mortgages, had totaled to 919.2 billion Yuan ($136.69 billion) last month and this accounted to about 22.3% of the new loans in February.