February home prices slightly higher in major China cities

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Workers carry out construction at a property project site in Nantong of China’s Jiangsu province. CHINA DAILY

Home prices in major Chinese cities saw mild year-on-year growth last month and experts expect the tightening measures to play a bigger role in cooling home prices and stabilising the property market.

Prices of new homes in the 70 cities tracked by the National Bureau of Statistics (NBS) rose by 0.36 per cent on a monthly basis in February, compared with the 0.28 per cent gain in January. On a yearly basis, prices grew by 4.06 per cent last month.

Out of the 70 cities, 56 cities saw price growth last month, three more than in January. Two cities reported no change, and 12 recorded a decrease in prices.

NBS chief statistician Sheng Guoqing said: “Although home prices in various Chinese cities performed quite differently on a monthly basis, all the cities saw a mild growth in year-on-year terms.”

Despite the lower base of last year, when the real estate sector in the country was battered due to the novel coronavirus epidemic, the industry is witnessing robust demand due to the country’s faster-than-expected economic recovery.

New home prices in the four top-tier cities rose by 0.5 per cent on a monthly basis, with Guangzhou seeing the maximum gain of 0.9 per cent, followed by Beijing with 0.7 per cent, Shanghai at 0.5 per cent and Shenzhen at 0.1 per cent.

Unlike a year ago, the four major cities saw a 4.8 per cent growth in new home prices, up 0.6 percentage point from that of the previous month, according to the NBS.

First-tier cities outperformed smaller cities in terms of new home price growth. Prices in the 31 second-tier cities monitored by the NBS rose by 0.4 per cent on a monthly basis, and by 4.5 per cent on a yearly basis, while the figures were 0.3 per cent and 3.6 per cent respectively for the 35 third-tier cities.

Beike Research Institute chief market analyst Xu Xiaole said: “With millions of people deciding to stay put during the Spring Festival holiday, the home market became very active in major Chinese cities, leading to price increases.”

In the pre-owned home market, first-tier cities again took the lead in price gains. Fifty-five of the 70 cities reported price growths, six more than in January.

Compared with January, the top-tier cities saw a 1.1 per cent gain in existing home trading. Specifically, Shanghai reported the largest month-on-month increase of 1.3 per cent in transaction prices among the top four cities, followed by Beijing with 1.2 per cent, Guangzhou with 1 per cent, and Shenzhen with 0.9 per cent. The four cities witnessed a 10.8 per cent growth on a yearly basis in existing home prices.

Used home prices in the 31 second-tier cities rose by 0.4 per cent from a month ago, and by 2.9 per cent on a yearly basis.

The 35 third-tier cities saw their existing home prices rise by 0.2 per cent from the previous month, and an increase of 1.9 per cent from the same period a year ago.

Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, said: “Quite a few cities have fine-tuned their home purchase measures recently, which effectively helped stabilise home prices. Home price stability would remain as the focus of the residential market.”

And Centaline Property Agency Ltd chief analyst Zhang Dawei said: “In Shenzhen and Shanghai, new tightening policies released recently are expected to cool down the local home markets. We believe that more cities will announce their own cooling measures as the conventional warm-up season is approaching.”

This year may prove challenging for the real estate developers due to the economic headwinds, and financial de-risking may become a renewed focus, according to Savills China research.

CHINA DAILY/ASIA NEWS NETWORK