New | China’s mid-sized cities likely to see property uptick this year, analysts say

Expect further gains in homes prices among China’s medium-sized cities this year, owing to the government’s supportive policy measures and an improving supply-demand balance, according to analysts.

Tier-two urban areas such as Hangzhou, Nanjing in the east and Chengdu in the west are among cities that should see catch-up gains this year, analysts said.

The divergence in the mainland property market has intensified in the past few years, as larger cities such as Beijing, Shanghai, and Shenzhen saw prices explode to the upside while smaller cities were dogged by sluggish price performance amid oversupply.

Lee Wee Liat, head of Asia-Pacific property research at BNP Paribas, expects property prices in second tier cities to recover in the next 12 months.

“We see supply is relatively limited but demand is growing, home sales have started to pick up since the second half of last year,” Lee said at a press briefing in Hong Kong on Wednesday.

During the last two years, investment into property in medium-sized cities has cooled dramatically. The total area of land sold in these urban areas has fallen between 30 per cent and 50 per cent in each of the last two years, according to BNP Paribas.

Meanwhile there are indications excess inventories of unsold homes are being drawn down.