China’s home prices rise at fastest rate for 2 years
September 18, 2018 Category China News Round-up, Weekly
China’s home prices rose at their fastest pace in almost two years in August, increasing the likelihood of more government tightening in the housing market. New-home prices increased 1.49% from the previous month, according to Bloomberg calculations based on data for 70 cities released by the National Bureau of Statistics (NBS). That compared with a 1.2% increase in July. It was the sixth straight monthly acceleration. Of the 70 cities, the biggest month-on-month price increase in August was a 3.4% gain in Wuxi. In Beijing, where still more tightening was announced, prices were unchanged; in Shanghai, they were up 0.1%.
The government is likely to maintain property curbs, based on fears that any relaxation will lead to another round of price surges, Zhu Haibin, Chief China Economist at JPMorgan Chase, said. Officials are seeking to keep housing affordable and limit the risk of destabilizing bubbles. “The government worries a lot. At this stage, there’s no intention to relax the housing tightening,” he said. For Zhu, the biggest worry in the housing sector is the diminished role of market forces in pricing and sales, as the government’s “temporary” administrative restrictions become permanent. Tightening measures – including purchase and resale curbs, increased down-payments and price caps – have been rolled out in 114 cities, according to brokerage CLSA. Despite this year’s price gains, China’s developers are facing their gloomiest outlook for eight years, weighed down by a squeeze on financing, a looming property tax and home-purchase curbs, according to Standard Chartered.
The property market remained lukewarm in some of the country’s biggest cities, however. Prices in Guangzhou and Shenzhen in Guangdong province, were up 0.9% and 0.5% respectively month-on-month. The coastal city of Xiamen experienced a 0.1% slump in prices for new homes in August, while its year-on-year rise was 0.3%. In 2017, the city had recorded the country’s lowest average rental yield of just 1%, according to a report by Shanghai-based E-house China R&D Institute. At that rate, investors could expect to wait 100 years to recover their initial investment if they relied solely on rent. Sanya and Haikou, the two hottest destinations in Hainan province not only for tourists but also for home buyers, posted month-on-month increases of 0.1% and 0.9% respectively, compared with a year-on-year surge of over 20%, the South China Morning Post reports.
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