Growth in China's home prices eased to a nine-month low in January in a further sign that the slowing economy is weighing on consumer confidence. Weakening price gains point to strains on China's massive property sector and raise questions over whether more cities will risk loosening restrictions on home buyers.
Average new home prices in 70 major cities rose 0.6 percent in January, the weakest pace since April 2018, according to Reuters calculations based on data from the National Bureau of Statistics (NBS) on Friday. That was slower than December's 0.8 percent monthly growth but marked 45 straight months of price increases, Reuters calculations showed.
While monthly price gains are slowing in many cities, analysts said there was no cause for alarm yet, noting they are still up 10 percent on year, pointing to strong underlying demand for housing. Prices rose 9.7 percent in December.
Fifty-eight of the total 70 cities surveyed by the NBS reported higher prices in January, down from 59 in December.
China's economy grew at its weakest pace in 28 years last year due to trade frictions and Beijing's multi-year campaign to crack down on debt risks, weighing on consumer sentiment and the outlook for the country's residential property market.
Analysts say uncertainties stemming from the US-Sino trade war have also turned more investors bearish, but the current price gain is still within a healthy range and far from alarming.
"This is not a turning point because people were more cautious on their budget constraint, which is related to the progress of the trade war," said Iris Pang, Greater China economist at ING in Hong Kong.
"If the trade war is not escalating, I think there will be more investor demand from property and other asset markets."
More marginal policy easing at local levels are likely to occur this year if risks of a sharper correction arise, Pang added.
Some smaller cities have quietly loosened property policies to stabilise sentiment. In December, Heze, a city in eastern China, reversed a rule designed to curb real estate flipping. Zhang Dawei, an analyst with Hong Kong-based property consultancy Centaline, said polarisation among markets of different sizes in China was growing as local authorities pursue opposing policies based on their own conditions.