China’s new home prices in June rise fastest in 20 months
Property price and sales growths represent a defiance of government controls to cool the market
China’s new home prices rose in June at the fastest pace in 20 months, even as the government stepped up controlling measures to fight price inflation.
Prices, excluding government-subsidised housing, rose month-on-month in a record 63 cities out of the 70 cities tracked by the authorities, surpassing the previous high of 61 cities in May, according to data released Tuesday by the National Bureau of Statistics. This is the fourth straight monthly acceleration.
New home prices fell in just four cities and remained flat in three: Beijing, Shanghai and Xiamen.
While the growth, strongest since October 2016, defied the past two years of relentless government curbs, it also sparked fears of more controls to come. Last month, local governments and policy banks have scaled down cash compensation for the country’s massive shanty town redevelopment programme, which is believed to have driven the property boom in Chinese lower-tier cities.
The Ministry of Housing and Urban-rural Development last week confirmed that it has ordered cities where prices are rising to refrain from compensating cash to residents forced to relocate. It also launched last month a six-month campaign against malpractices by developers and agents in 30 cities.
Ningde, a small city in eastern Fujian province, made headlines after it capped annual new home price increase at 6 per cent, and 3 per cent in the second half of this year.
Tuesday’s data showed that Haikou, the provincial capital of Hainan slated to become China’s largest free-trade zone, saw the largest month-on-month price advance of 3.9 per cent. Dandong, the city boarding North Korea – viewed a possible beneficiary of improving relations between Beijing and Pyongyang – registered a 3.3 per cent growth.
Price rises were accompanied by stronger sales: first-half property sales by value rose 13.2 per cent over the previous year. In June, sales climbed 17.1 per cent, cooling from the 20.6 per cent increase in May, according to data released by the bureau on Monday.
“The sales beat our expectations as they showed resilient growth over a high comparative base in June last year,” said Chen Shen, a property analyst with China Securities.
“One thing to watch for in the second half is whether developers with funding difficulties would accelerate their new project sales to recover cash.”
Statistics bureau spokesman Mao Shengyong said in a Monday press conference that while home prices in China’s third and fourth-tier cities had risen excessively this year, some remote areas with population outflows faced large unsold stockpiles and therefore warranted an approach of “differential policies for different areas”.