China home price rises ease for first time in 14 months

Average new home prices in China's 70 major cities rose 9.6 percent in January from a year earlier, easing from the previous month's 9.9 percent rise, according to Reuters calculations based on data released by the National Bureau of Statistics (NBS) on Monday.

It was the first slowdown in the rate of price increases since November 2012.

House prices in China have surged in the past year but the market began to show signs of losing momentum at the end of 2013 as local governments took further tightening measures at the prompting of a central government worried about the risk of an asset bubble.

"Because of the effects of a series of government measures including tightening curbs in some cities and an increasing supply of affordable housing, the market environment and pricing expectations were relatively stable," said Liu Jianwei, a senior statistician at the NBS.

"Tightening credit conditions and easing pressures from housing inventories also helped home sales to drop, which in turn eased the home price rises further in some cities," Liu said in a statement accompanying the data.

Home sales also cooled in most Chinese major cities in January due to the Chinese Lunar New Year holiday, when business activity in China slows markedly.

The housing data at the end of last year had shown signs that the relentless rises of 2013 were coming to an end, and a growing number of experts and developers are no longer as optimistic on the sector, and some of them have started to worry about downside risks.

LENDING CURBS?

Adding to concerns over the market, the official Shanghai Securities Journal said on Monday that China's Industrial Bank Co Ltd has suspended some types of property-related loans, although several other banks have kept property loan policies unchanged.

The report sent shares in property developer China Vanke Co Ltd tumbling by as much as 7 percent to their lowest since January 2009 on Monday, while China Resources Land Ltd was heading for its biggest single-day slide in eight months.

Industrial Bank did not respond to calls seeking comment. Other mortgage lenders including Agricultural Bank of China Ltd, Bank of Communications Co Ltd and China Merchants Bank Co Ltd did not respond to calls for comment.

Separately, local media reported that some property developers in the eastern city of Hangzhou have started to cut home prices in past weeks as some of them are in urgent need of cash.

The NBS figure showed Hangzhou's home prices dropped 0.1 percent in January from the previous month, along with four other cities seeing month-on-month drops in January.

Prices in the capital Beijing rose 14.7 percent in January from a year earlier, easing from December's year-on-year increase of 16 percent, and marking the third month of slowing gains after a record jump in October.

Shanghai price gains also eased, to 17.5 percent in January from a year ago, versus 18.2 percent annual growth in December.

China's property market has seen a divergence between big cities, where strong demand and short supplies pushed up prices rapidly, and small ones, where the rises tended to be slower on soft demand.

Still, home prices are at record highs and well beyond the reach of ordinary people, suggesting Beijing will not let up on its tightening campaign anytime soon.

Analysts expect home price gains to moderate this year on relatively tight liquidity conditions and subdued demand following the strong demand seen in 2013.

(Reporting By Xiaoyi Shao and Jonathan Standing; Additional reporting by Clement Tan in Hong Kong, Gabriel Wildau in Shanghai, and the Shanghai newsroom; Editing by Chris Gallagher)