Average home prices rose for the third straight month in China during June, as the country’s consumers regain their appetite for real estate following a one year slowdown in the market.
The average price per square metre for new housing, including subsidised units, rose by 0.17 percent last month, according to figures released over the weekend by the National Bureau of Statistics, with fewer cities still reporting falling prices.
The continued recovery in the housing market follows months of improving sales volumes after China loosened restrictions on home purchases and lowered interest rates to revive its flagging real estate sector. There are also signs that China’s stock boom, which staggered heavily in late June and into this month, may have helped contribute to the rising number of home sales in the second quarter.
More Cities Reporting Positive Results
During June China’s housing recovery appeared to spread to more cities with 27 of the 70 cities surveyed reporting rising prices for new homes, excluding subsidised housing, compared to just 20 for May. 33 cities still reported falling prices, but this number was down from 41 for the previous month. 10 cities reported flat price growth.
China’s government has been working hard over the last several months to rekindle housing demand after the real estate sector, which is estimated to account for 15 percent of the nation’s GDP, had fallen into a year-long slump.
In late March the government relaxed housing restrictions to bring a large slice of China’s legion of housing speculators back into the market, and the central bank has now lowered interest rates four times in the last seven months.
The barrage of corrective measures appears to have had an impact, as prices continue to rise on a monthly basis, and sales volumes continue to rise.
The bureau’s latest figures on sales volumes, which were released last week showed that in terms of value, 10 percent more homes were sold in the first six months of 2015 than in the same period last year. By the volume of floor space sold, sales were also up by 3.9 percent compared to January through June of 2014.
However, when viewed year-on-year, home prices were still down 5.4 percent compared to June of 2014, continuing a decline that has been going on since September.
Big Cities No Longer the Centres for Buying
Unlike May’s results when China’s megacities showed the strongest growth in home sales, only one of the first tier cities – Beijing – landed among the top ten markets for month-on-month housing price growth during June, when prices for subsidised housing are included.
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The five fastest growing markets for home prices according to the Bureau’s latest survey, were Jinzhou in Liaoning province, with 7.15 percent growth; Jilin in the province of the same name, with 2.02 percent growth; Guilin in Guangxi province, with 1.53 percent growth; Beijing with 1.25 percent growth, and Haikou in Hainan province, with 1.19 percent growth.
In the results for May, Shenzhen, Guangzhou and Shanghai all landed in the top ten for price growth. However, for June the country’s major urban centres all showed slowing growth, except Beijing, where price growth climbed from 1.10 percent in May to 1.25 percent in June. The market in the nation’s capital may have been influenced by leaks last month of the city’s decision to move the local government to the outlying district of Tongzhou, which caused prices to rise by 25 percent in that area.
China’s other major cities showed a different story. Shenzhen came down the hardest with price growth falling from 6.52 percent in May to -0.28 percent growth in June, Shanghai dropped from 2.24 percent growth in May to show flat price growth in June, and Guangzhou fell from 1.39 percent growth in May to also show zero growth in June.