A woman walks past a property advertisement billboard in Beijing on December 9, 2016.
A woman walks past a property advertisement billboard in Beijing on December 9, 2016. Photo: AFP / NICOLAS ASFOURI

The party’s over – for China’s home prices, that is. At least for now. The days when small and large cities compared notes on who had the bigger monthly gain are evidently behind us as property transactions have hit a wall across the country from November, dragging prices lower.

2016 had been a dramatic year of surging real estate valuation across some of the most popular Chinese cities, with gains of 20-30% very common. Valuations have gone up by more than 40-50% in the past two years alone in highly sought-after markets such as Shenzhen and Shanghai.

With the latest mandate from Beijing’s Central Economic Work Conference stressing the need for a steady housing sector, provincial officials have their political futures dependent on steering clear of major price hiccups in 2017. However, that may not be so easy.

Already, the latest data show that the 15 cities with the hottest housing sectors have cooled off substantially during the second half of November, with nine headed lower, two staying flat and the remaining four up by much narrower margins, according to the National Bureau of Statistics on Monday.

“Property markets in 15 major cities are rapidly cooling off and the housing prices have been stabilized,” said Liu Jianwei, a senior analyst at the bureau.

Nine of them, including Beijing, Shanghai and Guangzhou, saw drops of between 0.1 to 0.9 percent during the final two weeks of November. Xiamen, the capital of Fujian province, and Chengdu, a key southwest hub, were the two cities that reported flat home prices during the same period.

The latest price trend suggests efforts to curb soaring prices since early October have been effective. Over 20 mid-to-top tier cities have announced tightening of mortgage lending and imposed stricter purchase limits.

Still, it’s worth noting that the corrections in home prices are only a fraction of their accumulated gains since 2015. The top three cities with over 45% gains in home prices during the last two years – Shenzhen, Nanjing and Shanghai – reported decreases of 0.2%, 0.1% and 0.2% from October, respectively.

The true test of China’s housing sector will come in 2017, with challenges including rising domestic interest rates and central authorities banning banks from supporting real estate speculators. If sentiment crumbles on any signs of weakness, precarious prices will only exacerbate the eagerness of investors to run for the exit.