China New Home Prices Fall The Most in Nearly Seven Years

China’s new home prices in October suffered their biggest month-on-month decline since February 2015, amid continued demand weakness as authorities held firm on purchase restrictions to ward off speculators.

New home prices fell 0.2% last month, according to calculations on data released by the National Bureau of Statistics (NBS) on Monday. It was also the first decline since March 2015.

The October contraction compares with zero price growth a month earlier. Some analysts had said prices ticked marginally lower in September based on their calculations.

China’s property market, which accounts for a quarter of gross domestic product by some metrics, has significantly slowed since May, with sentiment increasingly shaken by signs of stress in the sector, including a widening liquidity crisis that has engulfed some of the country’s biggest and most indebted developers.

Real Estate Tax

Last month, the top decision-making body of the Chinese parliament said it will roll out a pilot real estate tax in some regions, aiming to deter speculators and cool surging home prices.

Bankers and analysts expect China to stand firm on policies to curb speculative purchases and excess borrowing by developers, even as it makes financing tweaks to help home buyers.

Authorities said in September that banks ought to offer financial support for genuine home buyers with so-called “rigid” demand, referring to purchasing or renting from those recently married or seeking low-cost housing.

The China Banking and Insurance Regulatory Commission (CBIRC) said lenders should avoid inflexible rules that penalise non-speculative, legitimate home buyers.

Home Loans

Some Chinese banks in recent weeks have sped up the disbursement of home loans in some cities, helping to support sentiment among buyers and also providing relief to cash-strapped developers anxious to complete sales.

Monthly prices picked up in 13 of 70 cities, less than 27 cities reporting price gains in September, the fewest since March 2015.

On year, overall new home prices rose 3.4% in October, the slowest pace since January, according to Reuters calculations of the statistics bureau data.