Monthly growth in average home prices in China grew to 0.95 percent during August as the country’s housing market heated up during a traditionally slow sales month.
The average price across 100 of China’s biggest cities grew to RMB 10,787 per square metre, according to a report issued this week by the China Index Academy, a unit of online real estate platform Soufun.
The 0.95 percent increase over July was a major step up from growth rates of just over 0.5 percent in June and July, as investors flee the stock market and gain confidence in the country’s real estate sector.
First Annual Increase in Nearly One Year
The nearly one percent jump created a 0.15 percent increase in prices compared to August 2014, the first year-on-year increase in average home prices in China for ten months, after the government had moved to cool down the market in late 2013. Prices for new homes have climbed during five out of the eight months in 2015, according to the Academy.
Keeping with the trend of this recovery, the strongest growth took place in China’s largest cities, with prices in the ten largest metropolises growing by 3.83 percent in August. Shanghai, the country’s commercial capital led all cities with a month on month growth rate of 3.77 percent, and Beijing was third on the list after prices rose by 1.74 percent compared to July.
In all, August home prices were higher than July’s in 51 out of the 100 cities surveyed, up from just 46 communities last month. Prices continued to fall in 49 cities, compared to 53 cities in July.
Warming Up for Golden September
After the Ministry of Housing and Urban-Rural Development lowered down payment levels late last week for purchasers of additional homes, August’s growth spurt should be just a prelude of what to expect in September.
Referred to in China’s real estate industry as Golden September, the ninth month is traditionally the busiest time for home sales as buyers return to the market after the steamy summer months.
Now, with capital continuing to exit the stock market, China’s investor class will likely return to a housing market that it was effectively locked out of by a series of administrative measures, including higher down payment rates, that were put in place after housing prices spiked from 2011 through 2013.
Investors have also been encouraged by a series of interest rate cuts since last November, with China’s Central Bank last week cutting the benchmark interest rate for five-year or longer loans to 5.15 percent. At the same time, the rate for housing provident fund loans was lowered to 3.25 percent, the lowest in history.
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