China’s housing ‘melt up’ continues, as new home prices rocket most in 19 months during May
China’s new home prices rose in May at the fastest pace in 19 months, even as the government’s two-year campaign to cool the housing market remained in full swing.
New home prices, excluding government-subsidised housing, increased in a record 61 cities out of the 70 cities tracked, up from 58 cities that recorded gains in April and 55 cities in March, according to data released Friday by the National Bureau of Statistics.
New home prices fell in seven cities and remained flat in two.
Dandong, the small Chinese city boarding North Korea, registered the largest price gain among the 70 cities tracked, gaining 5.3 per cent in May on month, accelerating from a 2 per cent rise in April on month. The city, seen a possible beneficiary of improving relations between Beijing and Pyongyang, has taken various measure to curb speculators since early May.
Elsewhere in China for the month, new home prices rose marginally in Beijing and Guangzhou, while they fell slightly in Shenzhen and Shanghai.
The robust price pickup defies two years of relentless government curbs, which led to 54 major Chinese cities imposing property purchasing restrictions.
Still, for the month China’s residential property sales by area grew 8.46 per cent over a year ago, the fastest expansion since June. The value of sales for the month surged 23.3 per cent from the same period a year earlier, reflecting the biggest monthly sale by value since June.
“The popular belief within China that this year will be a ‘small year’ for property has proven unwarranted. All data, including investment, sales, price and new starts, are robust. The June data will be even better than figures for May,” said Li Zhanjun, chief analyst with China Real Estate Research Association.
Other figures released Thursday showed new home starts, a key measure of developers’ sentiments, surged to a nearly two-year high of 20.5 per cent in May, rebounding from 2.9 per cent growth in April.
Chen Shen, a property analyst with China Securities, said the robust sales figures for May was related to a significant rise in new home supply.
Many developers had held completed housing units as unsold inventory in the expectations of higher prices when the government restrictions designed to cool the market.
“The government also has tolerated a bit higher selling prices when granting pre-sale permits, which added to the interest among developers,” Chen said.
“The recent credit tightening has pushed more developers to accelerate the pace of selling new projects in order to recover cash.”