Restrictions Start to Bite



“October data showed a clear change in price trends as the new restrictions announced over the national holidays resulted in significant reductions in transaction volumes. Stricter background checks on home buyer mortgage applications, tighter credit controls and the overall negative buying sentiment caused by the policy chance may have all had an impact,” said James Macdonald, Head of China Research.


In October, 62 of the 70 cities recorded month-on-month (MoM) increases in first-hand commodity residential prices, compared to 63 cities in September. Of the remaining eight cities, one saw no change, while seven recorded price decreases. 

The five cities with the largest increases were: Wuxi (4.9%), Changsha (4.5%), Zhengzhou (3.5%), Jinan (3.4%) and Hangzhou (3.2%)

The five cities with the largest decreases were Chengdu (-0.8%), Mudanjiang (-0.5%), Shenzhen (-0.5%), Urumqi (-0.4%), and Nanchong (-0.4%)

On average, prices in the 70 cities increased by 1.07% in October, the eighteenth consecutive MoM increase for the 70 city index, but down from 1.80% in September. Average prices are currently up 10.43% year-on-year (YoY), and up 21.20% compared to December 2010 when the index was first established.


First Tier City Analysis

First-tier cities, in a rapid reversal of fortunes, recorded the slowest pace of price growth of any city tier, with growth rates collapsing to 0.47% in October, down from 3.28% the previous month.

Once the laggard among first tier cities, Guangzhou claimed the mantle of the fastest growing first tier city from Shanghai and Shenzhen as growth rates in those two cities cooled and, in the case of Shenzhen, reversed. Shenzhen recorded its first monthly decline in pricing in nearly two years, falling 0.5% in October.

Table 1: First-tier city first-hand commodity residential price movement

City Sep-16 (MoM) Oct-16 (MoM) Acceleration Oct-16 (YoY) Oct-16 vs Dec-10
Beijing 4.9% 0.6% -430 bps 30.2% 74.01%
Shanghai 3.2% 0.5% -270 bps 37.4% 85.76%
Guangzhou 3.1% 1.3% -180 bps 23.8% 63.05%
Shenzhen 1.9% (0.5%) -240 bps 32.1% 127.83%
Average 3.28% 0.47% -280 bps 30.88% 87.66%

(National Bureau of Statictics; Savills Research)


First tier cities continue to have some of the lowest levels of unsold inventory, the most vibrant economies and job markets, as well as some of the strongest housing demand. Despite this, increasing unaffordability as well as stricter lending criteria and purchasing restrictions have tempered growth for the short term, allowing these markets to consolidate recent home price increases.


City tier analysis

All city tiers recorded price growth in October for the third consecutive month. Second tier cities recorded the strongest price growth for the second consecutive month, increasing by 1.91%, though down from 3.41% in the previous month. All city tiers also recorded slowdowns in the pace of price growth in October with the largest slowdowns seen in bigger cities. First tier cities saw price growth slow by 2.8 percentage points (ppts) while second tier city price growth slowed by 1.51 ppts.


Table 2: First-hand commodity residential price movement by tier city

Tier city Sep-16 (MoM) Oct-16 (MoM) Acceleration Oct-16 (YoY) Oct-16 vs Dec-10
1 3.28% 0.47% -280 bps 30.88% 87.66%
2 3.41% 1.91% -151 bps 20.05% 33.06%
3 1.51% 1.00% -52 bps 8.60% 16.30%
4 1.20% 0.95% -25 bps 4.99% 11.26%
5 0.62% 0.48% -14 bps 1.72% 6.31%
All 1.80% 1.07% -74 bps 10.43% 21.20%

(National Bureau of Statictics; Savills Research)


First- and second-tier cities


The four best performing second-tier cities in October were Wuxi (4.9%), Changsha (4.5%), Zhengzhou (3.5%), and Hangzhou (3.2%).


While most second tier cities, and indeed most cities, recorded a slowdown in price growth, there were a number that saw a pick up in price growth from September, primarily those in the north east and west, namely Xi’an (1.5 ppts), Dalian (0.5 ppts), Shenyang (0.2 ppts), Changsha (0.1 ppts).


Regional analysis

All regions recorded growth in October, while only the north west and north east recorded an acceleration in price growth. Growth in east China slowed from 2.85% to 1.67%, down 1.17 ppts MoM.


The north east and north west regions, while still recording some of the slowest growth rates, did record some improvement MoM, notably Xi’an (1.5 ppts), Dalian (0.5 ppts), Harbin (0.4 ppts), Dandong (0.4 ppts), Jinzhou (0.4 ppts), Shenyang (0.2 ppts), Changchun (0.2 ppts), Xining (0.1 ppts), Jilin (0.1 ppts).


Table 3: First-hand commodity residential price movement by region

  Sep-16 (MoM) Oct-16 (MoM) Acceleration Oct-16 (YoY) Oct-16 vs Dec-10
South 1.91% 1.02% -89 bps 11.48% 28.53%
North West 0.22% 0.38% 16 bps 2.14% 14.50%
North 1.88% 0.90% -98 bps 10.54% 23.88%
Central 2.40% 1.63% -77 bps 9.83% 22.33%
North East 0.17% 0.32% 15 bps 0.38% 8.28%
East 2.85% 1.67% -117 bps 18.31% 26.92%
South West 0.67% 0.16% -51 bps 3.20% 9.51%

(National Bureau of Statictics; Savills Research)



The market has been turned on its head by the new policies. Many local governments are waiting to analyse the impact these measures have on markets before tweaking their own rules to insure stable pricing, in order to keep transaction volume levels healthy and on pace with future supply levels. Many developers are unlikely to respond immediately to the measures and any market fluctuations, with most expected to reach or exceed sales targets. Nevertheless, these developers will be looking at 2017 and wondering what new strategies they will need to develop to overcome market challenges or adjust targets to more manageable levels.


While it is important that individual cities have the ability to introduce policies to affect supply and demand levels as well as price growth, the increasingly convoluted and varied nature of these measures are making it harder to understand and navigate China’s property market, for investors, developers and home owners alike. At some point in the not too distant future, there needs to be a comprehensive review of the different land management and price cooling measures that have been tried and tested in individual locations, with the best and most effective measures actively promoted by a central authority to city governments as a toolkit for local policy makers and administrators. There should also be, if there is not already, a central resource that tracks and reports on policy changes with regards to the property and land markets, not just at the national levels but at the provincial, city and district level. Increased transparency and consistency is needed in this market that remains such an important pillar to the economic health of the nation.



National Bureau of Statictics. [Online]

Savills Research. [Online]

国家统计局. [Online]





MoM:    Month-on-Month

YoY:      Year-on-Year

YTD:     Year-to-date

(Chinese Version)







(国家统计局; 第一太平戴维斯市场研究部)


(国家统计局; 第一太平戴维斯市场研究部)


表 1: 一线城市新建商品住宅销售价格环比变动情况
城市 16年9月 (环比) 16年10月 (环比) 增速变动 16年10月 (同比) 16年10月比10年12月
北京 4.9% 0.6% -430个百分点 30.2% 74.01%
上海 3.2% 0.5% -270个百分点 37.4% 85.76%
广州 3.1% 1.3% -180个百分点 23.8% 63.05%
深圳 1.9% (0.5%) -240个百分点 32.1% 127.83%
平均 3.28% 0.47% -280个百分点 30.88% 87.66%
(国家统计局; 第一太平戴维斯市场研究部)


(国家统计局; 第一太平戴维斯市场研究部)




表 2:新建商品住宅销售价格环比变动情况(按城市等级划分)
城市等级 16年9月 (环比) 16年10月 (环比) 增速变动 16年10月 (同比) 16年10月比10年12月
一线 3.28% 0.47% -280个百分点 30.88% 87.66%
二线 3.41% 1.91% -151个百分点 20.05% 33.06%
三线 1.51% 1.00% -52个百分点 8.60% 16.30%
四线 1.20% 0.95% -25个百分点 4.99% 11.26%
五线 0.62% 0.48% -14个百分点 1.72% 6.31%
所有城市 1.80% 1.07% -74个百分点 10.43% 21.20%
(国家统计局; 第一太平戴维斯市场研究部)


(国家统计局; 第一太平戴维斯市场研究部)




(国家统计局; 第一太平戴维斯市场研究部)



表 3:新建商品住宅销售价格指数(按地区划分)
16年9月 (环比) 16年10月 (环比) 增速变动 16年10月 (同比) 16年10月比10年12月
华南地区 1.91% 1.02% -89个百分点 11.48% 28.53%
西北地区 0.22% 0.38% 16个百分点 2.14% 14.50%
华北地区 1.88% 0.90% -98个百分点 10.54% 23.88%
华中地区 2.40% 1.63% -77个百分点 9.83% 22.33%
东北地区 0.17% 0.32% 15个百分点 0.38% 8.28%
华东地区 2.85% 1.67% -117个百分点 18.31% 26.92%
西南地区 0.67% 0.16% -51个百分点 3.20% 9.51%
(国家统计局; 第一太平戴维斯市场研究部)