Top-tier city index shows need for local rules

PUBLISHED : Tuesday, 15 April, 2014, 3:16pm
UPDATED : Wednesday, 16 April, 2014, 5:56am

The market for new homes in the two top-tier cities in Guangdong province experienced sharply contrasting fortunes last month.

Primary home prices rose 15.87 per cent in Guangzhou from February but fell 23.11 per cent in Shenzhen, the new SCMP-Creda index - a collaboration between the South China Morning Post and China Real Estate Data Academy, a mainland consultancy - shows.

The divergence between two cities in the same province indicates the impracticality of any attempt by the central government to impose a nationwide policy for the property market.

As tightening measures over the past few years have started to bite, China's leaders have vowed to allow local officials bigger roles in housing policy, fuelling expectations that some cities, including Hangzhou in Zhejiang province, could relax home buying rules to lift demand.

Last month, new home prices rose 9.55 per cent in Beijing and edged up a mere 0.34 per cent in Shanghai, the index shows.

The index, published every month, tracks primary home prices, transactions and affordability in 10 major cities on the mainland - Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin, Nanjing in Jiangsu province, Hangzhou, Wuhan in Hubei province, Chongqing and Chengdu in Sichuan province.

Official mainland housing market data is sketchy; critics say it does not fully reflect housing inflation over the past decade.

The new data showed that only two of the cities - Shenzhen and Chengdu - suffered month-on-month falls in new home prices last month.

Developers have been cutting prices in an increasing number of mainland cities during the past few weeks, starting with Hangzhou; this has pushed more homebuyers to the sidelines, as they wait for further cuts.

Prices fell year on year in two cities: 3.21 per cent in Chengdu and 2.97 per cent in Hangzhou. Beijing led the gainers, with a 34.5 per cent jump, and Wuhan was next, with a rise of 24.67 per cent.

Last month, Beijing was the most unaffordable of the 10 cities: the average primary home price of 28,235 yuan (HK$35,476) per square metre means a family would take more than 19 years, on average, to buy a new home.