On average, the 70 cities prices increased by 0.53% in February, down from 0.61% in January. Average prices are currently up 11.09% year-on-year (YoY), and up 39.82% compared with December 2010 when the index was first established.
In February 57 cities recorded an increase in prices, while 4 recorded no change and 9 recorded a decrease in prices.
Residential price growth slowed gradually, in line with the slowing economy. No particular grouping of cities stood out from the rest through the south-west, north-west and northeast regions have slightly outperformed other parts of the country over the last 12-month period, as they look to close the price gap that has grown in the previous five years. Out of the first-tier cities, Beijing recorded a marked slowdown going from 0.6% growth in January to a decline of 0.2% in February; this was led by larger units (>144 sqm) which went from 1.5% growth to 0.4% decline over the same period.
Local authorities, feeling that price growth has now come under control and wanting to encourage transaction volumes in support of local market and cash-strapped developers, are selectively loosening some of the more stringent restrictions while banks are starting to reduce the cost of financing in selective cities. This should provide some support to a market that has been relatively downbeat for the last six-plus months, with the hope of engineering a soft landing.
Authorities are still walking a fine line where the treatment for the property market's imbalances could kill or cure the patient. Given the overall weakness in the economy at the moment, it looks like authorities are erring on the side of caution with selective support of markets while trying to maintain control over markets and trying to avoid the perception of a change on broader policy.