CHINA – Chinese property stocks plunged in Hong Kong after eight Chinese cities added housing curbs, effectively dashing hopes that the Chinese government is done with cooling measures.
Eight cities including Chongqing and Nanning rolled out restrictions over the weekend, with most banning home resales within two to three years of purchase, the official Xinhua News Agency reported.
“Policy risk is back in focus as investors watch whether more cities will follow suit in issuing new controls,” said Toni Ho, a Hong Kong based analyst with Rhb Osk Securities Hong Kong Ltd. “In reality, home prices in some second to third tier cities may be stronger than the official figures.”
Authorities’ Resolve to End Gains
The latest curbs over a span of only two days show the authorities’ resolve and signal that home prices are ending across-the-board gains and may become more closely linked to cities’ economic fundamentals, Guotai Junan Securities’s Shenzhen-based analysts led by Hou Like wrote in a report on Sunday.
Chinese developers’ stocks slumped as much as 11 per cent after the news.
New-home prices, excluding government-subsidized housing, gained in 46 of 70 cities tracked by the government in August, compared with 56 in July, the National Bureau of Statistics said last week, the smallest number of increases since January.
“Property tightening may continue in the fourth quarter to further cool down the market,” said Katrina Fu, a Hong Kong based analyst with Sanford C Bernstein.
Since Friday, Xi’an, Chongqing, Nanchang, Nanning, Changsha, Guiyang, Shijiazhuang and Wuhan have tightened housing controls, according to Xinhua. In Shijiazhuang, buyers will be banned from reselling within five years.
The nation is on a city-by-city campaign to rein in house prices and limit the risk of bubbles. At least 44 cities have imposed restrictions on the resale of properties this year.