Report predicts no let up in Chinese house price rises
CLSA says near-40pc rise in land costs will continue to have knock-on effect on new home prices in largest cities
China’s booming property market will continue to see prices rally in its largest cities, according to new research from CLSA, driven by sharp and continued rises in the cost of land suitable for development.
During the first half of the year, land prices grew on average by nearly 40 per cent, influenced by strong rises the country’s four top-tier cities, which in turn are expected to increase the price of new homes, CLSA’s regional head of property research Nicole Wong told the group’s annual investor’s forum in Hong Kong.
The rises, she said, were a result of the swelling gap between government-controlled land supply and market demand over the last two years.
Demand is concentrated in a handful of big cities, she added, as 60 per cent of Chinese cities are seeing their populations decline or flatten.
“Overheating is happening in a fair number of cities,” she said. “In the cities where the economy is growing, land supply cannot catch up with that growth.”
The supply of property is also being limited by developers, many of whom are opting out of paying “sky-high prices” for land, and instead are containing their risk by slowing sales of existing properties, which pushes prices up, Wong said.
Property is almost an alternative currency