Advertisement
Advertisement
China property
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
The growth of new home prices in China’s biggest cities slowed amid tighter regulation. Photo: Bloomberg

New home prices in China’s big cities lose momentum as cooling measures bite, paving way for tougher restrictions in smaller ones

  • Prices of new homes in Beijing, Shanghai, Guangzhou and Shenzhen, crept up by just 0.4 per cent in March, less than the previous month
  • Smaller, second- and third-tier cities that saw faster growth in prices may soon find themselves subject to tighter property restrictions
The growth of new home prices in China’s biggest cities slowed amid tighter regulation, potentially paving the way for more stringent cooling measures in lower-tier cities that saw higher growth, analysts said.

Prices of new homes in the four first-tier cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, crept up by only 0.4 per cent in March from the previous month, slightly less than the 0.5 per cent increase seen in February, according to data from the National Bureau of Statistics. Among them, the southern city of Guangzhou had the biggest increase, of 1 per cent.

“The increase in housing prices in first-tier cities has narrowed, which is related to stringent policies,” said Yan Yuejin, research director of the Shanghai-based E-house China Research and Development Institute. “The work of stabilising housing prices needs to continue, because in the recent sales of housing projects, there is still” high demand.

05:05

Inside Sheng Siong supermarket billionaire Lim Hock Leng’s home in Singapore

Inside Sheng Siong supermarket billionaire Lim Hock Leng’s home in Singapore

Recent cooling measures imposed by the government have included instructing the governments of six cities to build more public housing to be rented by low-income groups and young people, the “three red lines” policy aimed at curbing developers’ leverage, preventing the money from business loans from flowing to the housing market and a centralised land sale policy that limits the number of land sales each year to three in 22 cities.

The policies aim to tame speculation by controlling capital, limiting demand with regulations, and increasing the supply of land to cool the market, said Li Yujia, senior economist at Guangdong Urban and Rural Planning and Design Institute, a policy advisory branch of the provincial housing regulator.

“Once housing prices rise, regulatory policies will be introduced immediately, and fixes [in policies] will be applied in the future. Regulations have begun to spread to third-tier cities,” Li said.

For example Sanya, a third-tier city in Hainan province, tightened its monitoring of housing sales earlier this month.

08:07

Cheap housing but few economic opportunities for young Chinese in city along Russian border

Cheap housing but few economic opportunities for young Chinese in city along Russian border

Second-tier cities have begun to tighten their measures too. Hefei in Auhui province specified new buying restrictions on Thursday, while Nanjing in the eastern Jiangsu province will reportedly start to set reference prices for secondary housing this month.

In March, the prices of new houses in 70 cities rose by 0.4 per cent overall month-on-month, basically the same as in February. However, the year-on-year rate of growth inched up from 4.1 per cent in February to 4.4 per cent in March, the highest since November last year.

The number of cities that recorded increases in their prices rose from 56 to 62 compared to the previous month, the highest since June 2019.

This signals an overall increase in housing prices across the country, which could be attributed to the low base after the worst of the pandemic last year and higher land prices since then, Li said. Second-tier cities had the biggest growth in prices of new homes, averaging 0.5 per cent on the month.

Li said housing prices in the first-tier cities have begun to peak. For second-tier cities, although the upwards trend still exists, there is insufficient momentum to continue to increase significantly.

Post