New home prices edge up in March; more cities rise
New home prices in China rose for a 35th consecutive month in March, with more cities reporting growth as the government supported demand from first-time buyers.
Prices gained despite curbs to dampen speculative demand.
Average new home prices in 70 major cities rose 0.4 percent in March from the previous month, up from 0.2 percent growth in February, Reuters calculated from National Bureau of Statistics (NBS) data published on Wednesday.
On a yearly basis, new home prices increased 4.9 percent in March, slowing from February’s 5.2 percent increase, partly due to a high base effect as policymakers imposed fresh tightening measures in late March last year.
Most of the 70 cities reported monthly price increases for new homes.
Fifty-five cities reported higher prices in March, up from 44 in February.
“Today’s data shows there is still significant upward price pressure,” Yan Yuejin, an analyst with Shanghai-based E-house China R&D Institute said.
“It is possible some cities will release more tightening measures.”
China’s property market has soared since 2016, giving a major boost to the economy but also raising concerns about bubbles.
Prices have slowly leveled off and even softened in first-tier cities following government measures to rein in speculative investment.
While more than 100 cities have introduced measures to cool home prices, analysts still expect moderate gains in the many smaller cities where regulations are less restrictive.
Haikou, a port city and the capital of South China’s Hainan Province, became the top price performer in March, rising 2.1 percent month-onmonth.
Prices in first-tier cities rose 0.1 percent in March from February, reversing a fall in the previous month, the NBS said in a statement along with the data.
Ouyang Jie, vice president of Shanghai-listed Future Land, said that developers have been rushing to roll out new projects in the hope of accelerating sales and securing funding, especially in smaller cities where inventories are falling rapidly.
“More high-end projects were released into the market in March as some were delayed by authorities in the beginning of the year when the two sessions were underway,” said Joe Zhou, head of research for property services company JLL China.
“Developers also have more pricing power in smaller cities for now because they had a really good sales
year in 2017 in those markets.”
But Zhou also warned of the risks of a moderate price correction later this year with demand frontloaded in smaller cities and signs of softening as more supply becomes available.
China posted its fastest property investment growth of 10.4 percent in three years in the first quarter, driven by a surge in land values and rising confidence among develo opers about the policy outlook.
On a national basis, average new home prices are expected to rise faster than previously anticipated in
2018 on falling inventories and still robust demand from smaller cities, according to a Reuters poll last month.