The growth in China's home prices decelerated across cities in January for the first time in 14 months, raising the likelihood of a correction in sales and construction activity going forward and sparking concerns of a "rocky quarter ahead."
New home prices rose 9.6 percent in January from the year ago period, compared with the 9.9 percent on-year increase in December, according to a Reuters calculation of official data released Monday, which showed prices rising in 69 of 70 Chinese cities on an annual basis.
Prices in Shanghai were up an annual 17.5 percent, compared with 18.2 percent in December, while Beijing prices climbed 14.7 percent in January from a year earlier, versus 16 percent in the month before.
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This is the first time the rate of price increases has slowed since November 2012. The pace of on-year price gains in December stayed stagnant versus November.
Analysts say the data signal that a string of tightening measures introduced by local governments in recent years, including raising minimum down payments for second homes and promising to supply more land for building residential properties, are working.
"While the new price data has surprised the market, a coming downturn was evident for the past 10 months," Brian Jackson, China economist at IHS Global Insight, said in a note titled House Prices in China Soften, Signaling Rocky Quarter Ahead.
"Following new national policies that launched in February 2013, month-on-month price growth decelerated through August. The second round of policies announced in August further ate away at price growth in major markets," Brian Jackson, China economist at IHS Global Insight, said in a note.