Chinese real estate inflation, investment edge down

Annual house price inflation in China fell in July for the third month running under the impact of a government drive against property speculation.  

Prices in 70 cities across China rose 10.3 percent in the year to July, down from 11.4% in the 12 months to June and a peak in April of 12.8%, the National Bureau of Statistics said on Tuesday.

But prices on the month were unchanged in July, following a  0.1% drop in June.
  
"House price inflation is slowing and should continue to ease further in the months ahead, but so far it has been a gradual deceleration rather than an abrupt correction in prices," said Brian Jackson, a strategist with Royal Bank of Canada in Hong Kong.

"Despite all the measures aimed at tightening credit in the property market introduced earlier this year, overall liquidity conditions in China remain accommodative, and this appears to be providing support to house prices," he said in a note.                                           

The government introduced an array of measures in April to deter speculative buyers for fear that prices were feeding on themselves in some markets and putting the cost of a flat beyond the reach of ordinary people -- an incendiary social issue for the ruling Communist party.

Beijing increased down payments and mortgage rates, made it tougher for people to buy multiple homes and tightened financing for developers. 

But the government has eschewed draconian measures, anxious not to topple a vital pillar of the economy. Real estate accounts for a quarter of investment and 10% of total output.

Investment in real estate rose 37.2 percent in the first seven months from a year earlier, slowing from a 38.1 percent rise in the first half, the statistics office said.

Newly started floor space fell, year to date, for the second straight month.

The statistics bureau usually provides only year-to-date data because figures for individual months can be volatile.       

But it said growth in real estate investment in July alone slowed to 33.0 percent, compared with a year earlier, from 46.3% in June; property sales in July, measured by floor space, fell 15.4% from a year earlier.