China’s soaring new home prices show no signs of cooling down
Prices in 100 major cities surged 2.7 per cent on average in August, the fastest monthly growth this year
China’s August new home prices recorded their strongest increase this year despite some city governments dropping hints of policy tightening to cool the market.
Average new home prices in 100 major Chinese cities rose 2.17 per cent in August to 12,270 yuan per square meter, compared to the 1.63 per cent rise in July, the fastest growth so far this year, research firm China Index Academy said on Thursday.
Year on year, prices surged 13.8 per cent in August, building on a 12.4 per cent gain in July. Sixty eight cities saw prices rise last month, compared with 66 a month earlier.
“The housing market showed no signs of waning in August,” China Index Academy said in a statement. “The strongest growth comes from cities in the Yangtze River Delta, Pearl River Delta and Bohai Rim area, the three biggest metropolitan regions.”
The housing market fever has also spread to some smaller cities with healthy economies.
Wuxi, a third-tier city between Shanghai and Nanjing, led the gains last month. Prices in the city were up 6.8 per cent in a month, outpacing its bigger neighbours.
China’s third largest city Shenzhen remains the most expensive city. Home prices climbed another 2 per cent in August to 54,478 yuan per square metre. The country’s tech hub has seen new home prices surge 43 per cent so far this year.
Municipal governments are stepping in to introduce new rules in an attempt to curb soaring property prices.
Xiamen, a port city in eastern Fujian province, will suspend the sale of homes to local buyers who already own two residences, and will ban non-residents from buying a second house. The measures start from September 5.
Wuhan, a transportation hub in central China, raised its minimum down payment requirement for a second house to 40 per cent, from the previous 30 per cent.
More cities are likely to join with similar curbs, but analysts say government hints on policy tightening in the short term have actually stimulated more demand.
“The speculation over policy tightening has triggered home buyers to rush into the market,” said Eva Lee, a property analyst at UBS. She added that the recent surge in land prices has also made buyers believe property prices will go even higher.
From August 22-28 the housing space sold in Shanghai soared 93 per cent on week to 555,700 square metres, setting a five-month record, according to Shanghai Homelink Real Estate Agency.
Buyers swarmed into Shanghai’s housing market amid media reports that the city will tighten mortgage rules and after hearing a number of government land auctions were called off.
Shanghai housing authorities on Monday denied any plan to tighten mortgage rules, but transaction volumes continued to hit new highs in the last three days of August.
“The liquidity is so abundant in China, there is no room for home prices to decline,” UBS’s Lee said.