Smaller cities keep Chinese property market hot in April
BEIJING: Home prices in China’s biggest cities softened in April as administrative curbs to dampen a red hot property market took effect, but robust demand in smaller cities resulted prices nationwide rising by their strongest in six months.
Average new home prices rose 0.7 percent in April, faster than the 0.6 percent increase in March, Reuters’ calculation of National Bureau of Statistics (NBS) data showed.
And although that was the biggest monthly rise since October, analysts stuck to their view that the property market has peaked thanks to measures taken to stifle speculation, and the question was only when it would come down.
“We expect tightening measures to increase in severity for the rest of the year, though we do not see a severe correction in prices, developers should suffer from a tight liquidity environment and continued declines in transaction volume,” North Square Blue Oak, a London-based boutique invest- ment bank, said in a note commenting on the data.
“While timing will vary city-bycity, we expect to see a price inflection point in many markets with price growth slowing under demand containment measures but cushioned by lack of supply.”
Despite slightly sharper gains on average, more cities reported price drops or slower price rises compared with March, the NBS said in a note accompanying the data release on Thursday.
Since late March, authorities in the bigger cities have intensified their campaign to drive speculators out of the property market, taking steps like forbidding buyers from selling newly purchased homes too quickly.
But as a result some demand spilled over into smaller cities where curbs are less stiff.
In China’s Tangshan city, a small city near capital Beijing, prices growth more than doubled in April from a month ago to 2.2 percent, NBS data showed. The Tangshan government announced new curbs to cool the market on Thursday.
But analysts stuck to the view that the sizzling property market has peaked, leaving the question of when it would come down.
“April’s data shows prices are still relatively steady. But as sales have dropped a lot in April, it will cool eventually,” said Rosealea Yao, property analyst at Gavekal Dragonomics.
Data released on Monday by the NBS had shown the area of property sold in April grew by the slowest rate since December 2015.
Prices in China’s smaller cities, or known as tier-3 cities, rose 0.9 percent in April from a month ago, while growth in tier-2 cities remained flat at 0.6 percent, Yan Yuejin, an analyst with E-House China R&D Institute, said after analyzing the official data.
But in China’s biggest cities, the rate of increase halved to 0.3 percent, he said.