Home prices rose in more Chinese cities during March than in February on the back of improved market sentiment, government data showed.
However, the price rises were mostly in the bigger cities and would not extend to the smaller cities, as the market divergence continued, said analysts, Xinhua reported.
New home prices rose in 62 of the 70 cities tracked by the National Bureau of Statistics last month, up from 47 in February. Prices fell in eight cities, the bureau said on Monday.
Shenzhen continued to see the fastest growth, with home prices jumping 61.6% year-on-year. It was followed by Shanghai, where prices rose 25%.
On a monthly basis, prices rose 3.7% in Shenzhen and 3.6% in Shanghai.
Xiamen, a southern port city, was the top performer on a monthly basis. Prices there gained 5.3% from February. In a year they gained 15.7%.
Senior Statistician Liu Jianwei said the price-growth gap has widened among cities. “Prices are rising much faster in first-tier and some hot second-tier cities than in other cities,” he said.
A slew of government supporting measures have led to better sentiment and a rebound in property sales since the second half of last year, but mainly in China’s biggest cities, which is opposite to the government’s goal to cut an oversupply of homes in smaller cities.
New Policy
In March, the central government requested city authorities to adjust housing policies to fit local conditions instead of adopting nationwide easing.
New housing policies in Shanghai, Shenzhen, and other first-tier cities have brought some calm to China’s property markets.
The new regulations require a buyer to pay a 70% down payment for a new apartment bigger than 120 square meters, instead of 40% previously. The new loan rate is 110% of the base rate. So it will now take longer to save up for a new home. Some house owners are getting eager to sell before the market price goes down further.
Property developers have started adjusting their sales strategies to fit with the new laws.
On April 17, property prices in Shanghai were 13% lower than March on 25. Only 392 houses were sold, which is one third of the number on March 25.
The new policies are expected to cool the market down further, reduce speculative buying, and bring the property market back on a stable development path, the government said.
In cities such as Haikou, Shenyang and Ningbo, where sales have been week due to oversupply, subsidies have been introduced to encourage home purchases.
“Prices will continue to recover in bigger cities,” said Jinsong Du, head of Asia property research at Credit Suisse. “With credit easing and the stock market crash, money has scrambled to real estate.”
He added that growth in some second-tier cities where governments haven’t tightened buying controls, would outpace first-tier cities, while there remains little hope for smaller cities as the Chinese economy is weak and the housing inventory is too large.
“Consumers have become more selective and they believe properties in first- and second- tier cities can maintain their value,” Du said.
