China home prices pick up pace in January
New home prices in China showed strong growth in January, after the central government’s new initiatives to ease the glut in smaller cities.
Prices of new homes in 100 biggest cities rose an average of 4.37 per cent year on year to 11,026 yuan (HK$13,014) per square metre in January, the sixth straight month of gains and the fastest growth since August, property research house China Real Estate Index System (CREIS) said.
On a month-on-month basis, prices in January were up 0.42 per cent, but slower than the 0.74 per cent gain seen in December.
“Local governments have taken a number of supportive measures to unleash demand from new immigrants such as improving the Housing Provident Fund System and asking developers to upgrade construction quality,” CREIS said.
Sixty cities saw new home prices rise from the previous month, compared with 51 cities in December. Gainers were led by cities in Guangdong province, where Huizhou jumped 5.45 per cent and Shenzhen was up 5.24 per cent.
Shenzhen continued to be the priciest city nationwide, with average new home prices surging 45 per cent from a year ago, to 44,823 yuan per square metre. Shanghai was the second most expensive, with prices rising 15 per cent year on year to 37,062 yuan per square metre in January.
CREIS said it expects home prices to maintain steady growth after the Lunar New Year, a traditional slack season for home sales, and rise quickly in some leading cities.
A separate survey by Real Estate Information Corporation (CRIC) showed primary prices in 288 cities rose 3.39 per cent on average in January from a year earlier, the sixth straight year-on-year rise.
China’s housing market suffered a slowdown at the beginning of 2015 but ended the year on a high note, thanks to the government’s five interest rate cuts and accommodative policy.
The central authorities decided in December to include housing destocking in their five economic targets for 2016 and urged local governments to issue easing policies to boost demand, in the hope the property sector will hold up amid a wider economic slowdown.
Joe Zhou, property consultancy Jones Lang LaSalle’s head of research in China, said many smaller cities still face mounting inventories and need long-term reforms to attract population inflows.
“Tier-three and -four cities will need to look beyond measures aimed purely at stoking GDP growth and consider other factors – such as the quality of talent, the presence of robust, symbiotic industrial clusters, environmental conditions, and ‘quality of life’ – that will make them more attractive locations in which to live, work and do business,” Zhou wrote in a report on Monday.