Secondary home market recovery sustainable in Beijing and Shanghai
China's two most important markets continue to record gains in home prices despite lack of more policy support
Prices of existing homes in Beijing rose year on year for a second month in July while gains in Shanghai accelerated for a third month, the latest SCMP-Century 21 index showed, indicating a housing recovery is likely to sustain in China's two most important markets despite a lack of further policy support.
In the capital, prices rose 4.5 per cent from a year earlier to 42,735 yuan per square metre, faster than an annual gain of 2.6 per cent in June.
"The secondary market was very hot in Beijing, in contrast to many rainy days in July," said consultancy Century 21 China Real Estate, the partner of the South China Morning Post for the monthly index.
In month-on-month terms, prices in Beijing gained 1 per cent, faster than June's 0.6 per cent and May's 0.1 per cent. They have been rising since September when the People's Bank of China relaxed mortgage policies.
"Some Shanghai landlords increased asking prices recently, pushing a few buyers to the sidelines," Century 21 said. "But all phenomena still point to a sustainable warm-up in [the city]."
The home price index in Beijing climbed up to 163 from June's 161, while the reading for Shanghai remained at 147.
The market for existing homes on the mainland is often more sensitive to changes in sentiment than the primary market. So far, the recovery in the country's housing market is only limited to first-tier cities, including Guangzhou and Shenzhen, and some second-tier ones. The vast majority of the third and fourth-tier cities are still struggling to shake off a heavy glut, weighing down overall property investment growth across the country.
"The existing home markets in Beijing and Shanghai extended strong transactions in July, setting a solid foundation for continued recovery in the second half," Century 21 said.
The SCMP-Century 21 index showed transactions rose 13.2 per cent month on month in Beijing last month to 22,977 units, the highest level since March 2013. On the year, they jumped 151 per cent.
In Shanghai, sales fell 3.6 per cent from June but soared 169 per cent from a year earlier to 34,941 units, which was a record high for the month of July in any past years. It also marked the fourth consecutive month for transaction volume to stay above 34,000 units, which has never been seen in history.