The rebound in China’s housing prices appears to have picked up pace during June, with the average cost of a new home rising by 0.56 percent, according to a private survey released today.
The average price of a new home nationwide is now RMB 10,628 ($1,714) per square metre, according to the monthly study of residential real estate in 100 Chinese cities by the China Index Academy, a unit of online real estate platform Soufun.
June was the second month in a row that home prices have risen in China after a year-long slump, and follows soon after removals of price restrictions brought wealthy speculators back into the market.
As the country’s stock market begins to look shakier, the upward trend in housing prices could continue, as more of the country’s investor class look for a place to park their excess cash.
Shenzhen Prices Rise 6.58 Percent in One Month
China’s 10 biggest urban areas averaged price increases of 1.09 percent in June compared to the previous month, with Shenzhen, which rose by 6.58 percent, reporting the biggest jump nationwide.
Shanghai, the nation’s commercial centre, reported a price hike of 1.39 percent, while Wuhan in Hubei province saw prices go up by 1.98 percent.
Out of the top ten, only Guangzhou, which fell by 0.27 percent, and Chongqing which declined by 0.45 percent reported dropping prices.
While price increases were biggest in China’s mega-cities, more communities were reporting a recovery in June than had been the case earlier this year.
Overall, 53 out of the 100 cities surveyed reported month on month price increases in June, up from 48 in May. 46 cities reported falling prices – six fewer than had suffered declines in May. Ma’anshan in Anhui province had the biggest monthly price slide, with prices falling by more than two percent compared to May.
Policy Moves Rekindle Market
The biggest factor in the rebound of China’s housing market appears to have been the government’s decision in late March to once lower down-payment levels for purchases of additional homes by families that already own at least one unit.
By reducing the downpayment level for such buyers from 60 percent to 40 percent, it brought a large number of wealthy citizens back into the housing market. The government also relaxed some taxes on housing transactions at the same time, making it easier for the private investor class to speculate on real estate.
This same group of investors have been some of the most enthusiastic players in China’s stock surge of the last 12 months, which saw mainland indices hit record highs. However, with those mainland markets having slid into bear territory in the last week, many of these investors may be tempted to make money out of equities and place back into the housing market, which is viewed as a more stable investment. Should this trend materialise, housing prices may climb still faster in July, despite traditionally slower sales in the summer months.
The central bank has also cut benchmark interest rates four times now since last November, with the most recent round of cuts happening over the weekend.
Leave a Reply