Chinese new home prices continued to grow during December, although the pace was far slower than the levels reported earlier in year.

According to data released by China’s National Bureau of Statistics (NBS) on Wednesday, new home prices increased by 0.3% last month, down on the 0.6% pace seen in November and well below the 2.1% level reported in September.

It was the smallest nationwide increase in prices since December 2015.

Over the month, price declines of 0.4% and 0.2% were reported for Shenzhen and Shanghai, while those in Beijing were flat.

Clearly measures to cool rapid house price growth in some of the nation’s largest cities, introduced late last year, are now starting to bite.

As a result of the slowdown in December, the year-on-year increase in prices slowed, coming in at 12.4% having grown by 12.6% in the year to November.

As seen in the chart below, there’s now tentative evidence that the upswing in the current price cycle has now come to an end.

From a year earlier, the NBS said that prices still grew by over 20% in Beijing, Tianjin, Shanghai, Guangzhou and Shenzhen, although all registered a slower rate of growth than what was reported in November.

In particular, price gains in the buzzing southern metropolis of Shenzhen have slowed rapidly in recent months, dropping from an annual increase of 62.4% in April to 23.5% in December.

The slowdown in China’s once red-hot property market will be no doubt be welcomed by policymakers, although they will want to ensure that any further moderation is measured in nature to avoid the potential for a boom-bust scenario that could elevate financial risks should price declines accelerate.

The slowdown will also raise questions as to what will drive economic activity in the year ahead given strength in property prices encouraged a raft of residential construction activity, which, along with increased fiscal spending on infrastructure, helped to steady the economy after a shaky start to 2016.

Chinese commodity futures have certainly reacted to the slowdown in December with rebar, iron ore and coking coal all down more than 2% in early trade on Wednesday.

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