Developers cut prices over weak Chinese home price growth

China’s average house prices are expected to grow 6 percent in 2019 despite difficulty in the real estate sector and the wider struggles of the country’s economy. (Reuters)
Updated 17 September 2019

Developers cut prices over weak Chinese home price growth

  • Average increase of new house values softens amid slowing consumer demand and the Sino-US trade war

BEIJING: China’s new home prices grew at their weakest pace in nearly a year in August as a cooling economy and existing curbs on speculative buying put a dent on overall demand.

Wary of property bubbles,  regulators have refrained from stimulating sector as they try to boost an economy hit by the US tarriffs and slowing consumer demand.

Average new home prices in 70 Chinese cities rose 8.8 percent in August from a year earlier, compared to 9.7 percent in July and the weakest pace since October 2018, according to National Bureau of Statistics (NBS) data.

On a monthly basis, average prices rose 0.5 percent in August, less than July’s growth of 0.6 percent and the smallest increase since February. However, it still marked the 52nd straight month of gains. Most of the 70 cities surveyed by the NBS still reported monthly price increases, though it was down to 55 from 60 in July.

The property sector has held up as one of the few bright spots in the world’s second-largest economy.

China’s property investment grew at its fastest pace in four months in August, in contrast to a protracted slowdown in industrial output and investment.

But some analysts said the rebound in investment was likely due to developers rushing to meet government requirements before they can start sales on growing financing pressure and worries about the market’s prospects as regulators have made clear that supervision is only set to tighten.

Yang Yewei, a Beijing-based analyst at Southwest Securities, noted some developers have opted to cut prices, although the government’s tight control over new launches suggests they may not tolerate large discounts.

A resilient real estate market has provided some cushion for the world’s second-largest economy as policymakers try to revive the ailing manufacturing sector and restore flagging consumer confidence amid an escalating trade war with the US.

But regulators are walking a tightrope, as rapidly-growing household debt and ever-rising home prices have also deepened fears about a sudden market correction and concerns over housing affordability.

In a sign the government has turned more hawkish on its housing policy as it maneuvers to pump more credit into other areas of the economy, Chinese leaders said in July they would not resort to using the housing market as a form of short-term stimulus.

“The policy impact of this meeting was in full play in August,” said Xia Dan, an analyst with China’s Bank of Communications.

Slower price increases may give the authorities breathing room as they refrain from stimulating the property sector but economists at Nomura expect some tightening measures to be eased around end-2019 as weakness in the economy becomes more pronounced.

“Any attempt to stabilize growth by choking credit to the property sector could backfire,” they said, noting the sector comprises about one-quarter of China’s gross domestic product.

Price trends have been mixed lately, with some cities showing signs of rapid cooling and others still risking overheating.

In August, softer prices were mainly in tier 2 cities, including most larger provincial capitals.

Property prices there increased 0.5 percent on average on a monthly basis, easing from a 0.7 percent gain in the previous month, the statistics bureau said.

However, Nanning, the capital of Guangxi Zhuang Autonomous Region in southern China, was the top price performer in the month, with prices surging 2.3 percent on a monthly basis.

China’s four top-tier cities — Beijing, Shanghai, Shenzhen and Guangzhou — had an average gain of 0.3 percent from a month earlier, unchanged from July’s.

Out of the 70 major cities the government tracks, price growth in the smallest tier 3 cities rose the most on a monthly basis, though their increase of 0.7 percent was also in line with July’s pace.

China’s average residential property prices are estimated to rise 6 percent in 2019 from a year earlier, according to a Reuters poll published in August. The forecast was slightly higher than the 5 percent projected in the last poll conducted in March, but is significantly slower than the 9.7 percent gain seen in 2018.


Apple faces shareholder vote over Chinese app removal policies

Updated 9 min 14 sec ago

Apple faces shareholder vote over Chinese app removal policies

Apple Inc’s shareholders on Wednesday will vote on a proposal critical of its moves to remove apps at the request of the Chinese government and calling on the iPhone maker to report whether it has “publicly committed to respect freedom of expression as a human right.”
The proposal is one of six that will face a vote at the company’s annual shareholder meeting at Apple’s headquarters in Cupertino, California.
The shareholder proposal on freedom of expression focuses on Apple’s 2017 removal of virtual private network apps from its App Store in China. Such apps allow users to bypass China’s so-called “Great Firewall” aimed at restricting access to overseas sites.
Apple opposes the proposal, saying it already provides extensive information about when it takes down apps at the request of governments around the world and that it follows the laws in countries where it operates.
” hile we may disagree with certain decisions at times, we do not believe it would be in the best interests of our users to simply abandon markets, which would leave consumers with fewer choices and fewer privacy protections,” Apple said in its opposition.
Proxy advisory firms Glass Lewis and Institutional Shareholder Services both recommend votes in favor the measure, according to reports from them seen by Reuters.
Apple shareholders have voted down human rights measures related to China in the past. They defeated a 2018 proposal that urged Apple to create a human rights panel to oversee issues such as workplace conditions and censorship in China, with 94.4 percent of shareholders voting against it.
Shareholders will also vote on a proposal to allow shareholders to nominate more than one director to Apple’s board and whether to tie executive compensation to environmental sustainability metrics. Apple opposes both proposals.