China’s new home prices gain momentum in October, rise 1 per cent month on month
- Prices rise in 65 of the 70 cities surveyed by National Bureau of Statistics
- Southwest city of Guiyang sees the biggest price jump of 6.2 per cent
China’s new home prices continued to rise in October despite government measures to rein in prices, with analysts fearing the price curbs will remain firmly in place for the foreseeable future.
Average new home prices in China’s 70 major cities rose 1 per cent in October from a month earlier, according to the Post’s calculation using data published by the National Bureau of Statistics on Thursday. Home prices grew 0.9 per cent month on month growth in September.
“The robust price increase means the tight grip imposed by the government will remain for a long time, at least until mid-2019,” said Lu Wenxi, senior manager of research at Centaline Shanghai.
Sixty five out of the 70 cities surveyed by the NBS reported a monthly price increase, one more than September. The biggest gain was seen in the southwest city of Guiyang, in Guizhou province, where prices jumped 4.2 per cent over September. But that is moderate compared with the 6.2 per cent gain seen in Xian in September.
Yan Yuejin, an analyst with E-House China R&D Institute, said prices had risen because developers had stuck to an unyielding pricing strategy during the high sale season and marginal easing of price caps by some local governments.
Much of the growth was driven by smaller cities, while tier one and two cities registered flat or downward movement. Prices in 31 tier three cities rose 1.1 per cent month on month, faster than the 0.9 per cent gain in September.
Shenzhen however saw the largest decline of 0.5 per cent, while prices in Shanghai and Beijing rose by 0.1 and 0.2 per cent respectively.
However, price growth in the secondary market continued to cool in October, which is not tightly regulated like the new home market. Average price gain across all cities slowed to 0.3 per cent last month from 0.8 per cent in September.
According to Yan, downward revision in the listing prices of secondary homes is on the rise in the biggest cities.
Centaline’s Lu noted that overall buying sentiment has been cooling over the past two to three months.
For example, Lu said that preregistrations for buying high-end flats in Shanghai had taken a dive. “Just a few months ago if you registered for a new prime project with say 200 homes, you had no chance of securing one if your sequence number was 300. But now it is very likely you can secure one.”
Some overseas and domestic institutions have forecast a gloomy 2019. China International Capital Corp and CGS-CIMB Securities expect new home sales to fall 10 per cent next year, while S&P expects prices to decline 5 per cent.