New home prices climbed in 20 out of 70 major Chinese cities last month compared to April, as the country’s home market continues to see signs of recovery after a year-long slide.
Among the 70 urban centres surveyed each month by China’s National Bureau of Statistics, 41 cities still saw month-to-month declines in the prices of newly built homes, excluding subsdised housing, in May. But even this number decreased from April, when 47 cities reported price drops. In April, only 18 cities had reported price increases.
Overall, average prices for new housing, including subsidised units, were up 0.06 percent during May.
The signs of price growth in China’s home market come after government leaders loosened home purchase restrictions this year and cut interest rates, in an attempt to revive the country’s real estate sector.
First Tier Cities Lead Gains
Among the cities reporting gains, China’s largest urban centres led the housing recovery. For prices of all housing, including subsidised units, Shenzhen showed the sharpest monthly increase, rising 6.52 percent compared to April. Next in line was Shanghai, where prices rose 2.24 percent, with Guangzhou following at 1.39 percent and Beijing up 1.10 percent compared to April.
Among the tier-two and tier-three cities which rounded out the top ten gainers, the majority came from China’s prosperous east coast. Significantly, the Zhejiang province cities of Hangzhou, Ningbo and Jinhua were all among the top ten centres for price growth last month, after leading the housing slide last year.
However, even in the top ten cities for monthly gains during May, all but Shenzhen were still reporting prices at least two percent lower than during the same month last year. The southern Chinese megacity, which borders Hong Kong, was the only urban centre in the survey reporting an annualised increase in prices, with rates there up 7.28 percent compared to May of 2014.
A Tale of Tiers
While the first tier cities showed the most gains, its clear from the data that China’s smaller urban centres, (tiny places under five million population or so), are not quite ready to bounce back.
City | Index | Y-o-Y Difference | M-o-M Difference | City Tier | Province |
---|---|---|---|---|---|
Anqing | 102.5 | -6.39% | 0.00% | Second | Anhui |
Baotou | 104.4 | -7.86% | -0.19% | Third | Inner Mongolia |
Beihai | 105.1 | -7.07% | -0.19% | Third | Guangxi |
Beijing | 119.8 | -2.12% | 1.10% | First | Beijing |
Bengbu | 99.7 | -8.78% | -0.20% | Third | Anhui |
Changchun | 107.3 | -6.53% | -0.37% | Second | Jilin |
Changde | 106.1 | -6.85% | -0.28% | Second | Hunan |
Changsha | 112.5 | -9.05% | -0.27% | Second | Hunan |
Chengdu | 106.7 | -7.22% | 0.09% | Second | Sichuan |
Chongqing | 106.2 | -7.73% | -0.09% | Second | Chongqing |
Dali | 101.9 | -5.12% | -0.20% | Third | Yunnan |
Dalian | 108.8 | -8.49% | 0.00% | Second | Liaoning |
Dandong | 106.9 | -9.56% | -0.28% | Third | Liaoning |
Fuzhou | 111.2 | -8.02% | 0.00% | Second | Fujian |
Ganzhou | 107.5 | -6.52% | -0.37% | Second | Jiangxi |
Guangzhou | 123.9 | -4.77% | 1.39% | First | Guangdong |
Guilin | 107.9 | -9.86% | -0.19% | Second | Guangxi |
Guiyang | 109.4 | -4.37% | -0.18% | Second | Guizhou |
Haikou | 97.1 | -6.54% | -0.21% | Second | Hainan |
Hangzhou | 92.2 | -9.34% | 0.55% | Second | Zhejiang |
Harbin | 108.5 | -5.41% | 0.00% | Second | Heilongjiang |
Hefei | 110.3 | -3.50% | 0.18% | Second | Anhui |
Hohhot | 106.6 | -8.10% | -0.28% | Second | Inner Mongolia |
Huizhou | 104.8 | -8.95% | -0.38% | Third | Guangdong |
Jilin | 108.4 | -6.23% | -0.28% | Second | Jilin |
Jinan | 108.1 | -5.67% | 0.28% | Second | Shandong |
Jinhua | 98.4 | -5.84% | 0.31% | Second | Zhejiang |
Jining | 107.9 | -5.02% | -0.37% | Second | Shandong |
Jinzhou | 106.4 | -9.45% | -0.37% | Third | Liaoning |
Jiujiang | 103.4 | -6.34% | 0.29% | Third | Jiangxi |
Kunming | 108.1 | -5.92% | -0.18% | Second | Yunnan |
Lanzhou | 110.5 | -5.23% | -0.27% | Second | Gansu |
Luoyang | 109.1 | -7.07% | -0.09% | Second | Henan |
Luzhou | 103.8 | -9.50% | -0.38% | Third | Sichuan |
Mudanjiang | 109.1 | -3.88% | -0.09% | Third | Heilongjiang |
Nanchang | 111.2 | -6.32% | 0.18% | Second | Jiangxi |
Nanchong | 104.2 | -8.27% | -0.48% | Second | Sichuan |
Nanjing | 111.1 | -2.88% | 0.27% | Second | Jiangsu |
Nanning | 106.9 | -5.73% | 0.00% | Second | Guangxi |
Ningbo | 94.7 | -5.68% | 0.53% | Second | Zhejiang |
Pingdingshan | 108.3 | -6.40% | -0.28% | Second | Henan |
Qingdao | 100.5 | -9.46% | -0.20% | Second | Shandong |
Qinhuangdao | 107 | -7.68% | -0.28% | Third | Heibei |
Quanzhou | 99.4 | -9.22% | -0.10% | Second | Fujian |
Sanya | 100.7 | -6.41% | -0.20% | Second | Hainan |
Shanghai | 118.9 | -2.54% | 2.24% | First | Shanghai |
Shaoguan | 102.7 | -9.67% | -0.39% | Third | Guangdong |
Shenyang | 109.2 | -9.98% | -0.18% | Second | Liaoning |
Shenzhen | 135.6 | 7.28% | 6.52% | First | Guangdong |
Shijiazhuang | 116.2 | -4.36% | 0.09% | Second | Hebei |
Taiyuan | 110.5 | -5.07% | 0.18% | Second | Shanxi |
Tangshan | 98 | -5.50% | -0.61% | Second | Heibei |
Tianjin | 108.8 | -3.89% | 0.28% | Second | Hebei |
Urumqi | 117.3 | -6.53% | -0.17% | Second | Xinjiang |
Wenzhou | 77.1 | -3.14% | 0.26% | Second | Zhejiang |
Wuhan | 111.7 | -4.77% | 0.09% | Second | Hubei |
Wuxi | 101.6 | -5.40% | 0.10% | Second | Jiangsu |
Xi’an | 110.1 | -6.06% | -0.09% | Second | Shaanxi |
Xiamen | 126.8 | -0.47% | 0.08% | Second | Fujian |
Xiangfan | 107.3 | -7.82% | -0.09% | Second | Hubei |
Xining | 115.3 | -5.72% | -0.43% | Third | Qinghai |
Xuzhou | 108 | -5.18% | -0.09% | Second | Jiangsu |
Yangzhou | 104.5 | -7.36% | -0.19% | Third | Jiangsu |
Yantai | 104.8 | -7.58% | -0.19% | Second | Shandong |
Yichang | 108 | -6.49% | -0.18% | Third | Hubei |
Yinchuan | 108.4 | -6.31% | -0.37% | Third | Ningxia |
Yueyang | 110.5 | -3.91% | -0.18% | Second | Hunan |
Zhanjiang | 108 | -9.24% | -0.46% | Second | Guangdong |
Zhengzhou | 119.7 | -1.72% | 0.08% | Second | Henan |
Zunyi | 107.5 | -5.87% | -0.09% | Second | Guizhou |
Among the 16 third-tier cities included in the survey, all but Jiujiang in Jiangxi province were still reporting price drops in May. However, even the fastest sliding markets were still falling at less than single digits in terms of percentage, with the city of Tangshan in Hebei province sliding the most at 0.61 percent compared to April.
Unlike their bigger brethren, however, many of China’s second and third-tier cities are burdened with sizable inventories of unsold housing, the legacy of the country’s latest housing surge in 2012-2013.
Slow Investment Could Bring More Help for Housing
Despite the reappearance of growth in China’s biggest cities, slowing growth in real estate investment could trigger more government moves to rekindle the sector this year.
The summer months of July and August traditionally spell slower housing sales and less growth in pricing in China, but that could change should the government decide to cut interest rates again or take other steps to revive a real estate sector that is estimated to account for at least 15 percent of GDP.
While the value of China’s home sales increased in May for the first time in several months, the rate of investment continued a year-long slide to just 5.1 percent for the year to date. This slow-down in housing investment has already contributed to a decision by China’s central bank to cut benchmark interest rates three times since November, and many analysts are betting on more such moves before the summer is over.
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