China’s home prices pick up as buy­ers look to smaller cities

The Gulf Today - Business - - INTERNATIONAL -

BEI­JING: China’s new home prices rose in April with an in­creas­ing num­ber of smaller cities driv­ing broader growth, helped by state mea­sures that al­lowed buy­ers to get around ex­ist­ing re­stric­tions and eco­nomic de­vel­op­ment prospects in those cen­tres.

New home prices in China’s 70 ma­jor cities rose 0.5 per cent in April from the pre­vi­ous month, up from a 0.4 per cent rise in March, Reuters cal­cu­lated from National Bureau of Sta­tis­tics (NBS) data pub­lished on Wed­nes­day.

On an an­nual ba­sis, home prices in­creased 4.7 per cent in April, slow­ing from a 4.9 per cent gain in March.

Fifty-eight cities of the to­tal 70 cities sur­veyed by the NBS re­ported higher prices in April, up from 55 cities in March, sug­gest­ing broader mar­ket strength de­spite per­sis­tent curbs to con­tain the still hot mar­ket.

The data sig­nals an in­creas­ing dif­fer­en­ti­a­tion be­tween ur­ban prop­erty mar­kets across the coun­try, an­a­lysts say, with China’s city-based pol­icy fine-tun­ing has al­lowed some eas­ing of re­stric­tions in smaller cen­tres.

“This per­fectly il­lus­trates the kind of men­tal­ity still preva­lent in Chi­nese prop­erty mar­ket,” said Yan Yue­jin, re­search direc­tor at Shang­hai-based E-house China R&D In­sti­tute. “Many buy­ers are look­ing to buy in cities that are still cheap, with lax poli­cies and have come up with some kind of de­vel­op­ment con­cept, es­pe­cially as op­por­tu­ni­ties are lim­ited now in big­ger cities.”

New poli­cies that al­low col­lege grad­u­ates to by­pass pur­chase re­stric­tions in provin­cial cap­i­tals have stoked in­vest­ment, said Zhang Dawei, an an­a­lyst with Hong Kong-based Cen­taline, a real es­tate re­search con­sul­tancy.

Price growth in China’s sec­ond tier cities, which in­clude most of the larger provin­cial cap­i­tals, and smaller third tier cities ac­cel­er­ated 0.1 per­cent­age points and 0.2 per­cent­age points, re­spec­tively, in April, the sta­tis­tics bureau said. It did not give the ac­tual rates of growth.

An­a­lysts also point to po­lit­i­cal and eco­nomic de­vel­op­ments that have drawn new in­vestors into mar­kets away from the big­ger cen­tres.

The Chi­nese city of Dan­dong, which lies on the bor­der with North Korea, be­came the top price per­former in April, ris­ing a ro­bust 2 per cent, NBS data showed.

In­vestors rushed into the city’s prop­erty mar­ket af­ter the his­toric in­ter-korea sum­mit last month opened the prospect of rapid im­prove­ment in re­la­tions be­tween North Korea and the rest of the world.

China has also flagged the de­vel­op­ment of an in­ter­na­tional free trade zone and port on the south­ern is­land of Hainan, amid spec­u­la­tion it is try­ing to set up a ri­val to the trad­ing and fi­nan­cial hub of Hong Kong.

Hainan cities Sanya and Haikou both rose 1.9 per cent in April.

China’s house price growth started to cool more no­tably in the sec­ond half of last year as the government sought to deal with prop­erty bub­bles, fol­low­ing a two-year ex­pan­sion in the sec­tor.

Au­thor­i­ties have in­tro­duced curbs in more than 100 cities since 2016, in a push to re­duce bub­ble risks while en­sur­ing a soft land­ing as real es­tate re­mains a cru­cial driver of the econ­omy.

With signs that rapid hous­ing growth in top tier cities is cool­ing, reg­u­la­tors have this year turned their at­ten­tion to smaller cities where there have been no pur­chase re­stric­tions.

The Chi­nese south­ern provin­cial cap­i­tal Guiyang is­sued re­stric­tions this week ban­ning newly-built houses from be­ing resold within three years.

De­spite signs of mar­ket re­silience, data showed on Tues­day China’s prop­erty in­vest­ment growth slowed in April as higher bor­row­ing costs and in­creased curbs on buy­ers weighed on de­mand.

Some an­a­lysts ex­pect more curbs and that price ap­pre­ci­a­tion will mod­er­ate as a re­sult.

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