Sales of new housing space reached 1.404 million square meters in Shanghai last month, a 60 percent increase over the total from a year earlier with prices jumping more than 14 percent over the same period, according to data from a leading real estate information provider.
The flood of home sales can be expected to continue for the time being as the Xi government seems to be emphasising economic growth over inequality concerns by holding off on new measures to cool the market.
Shanghai Prices Jump for Second Straight Month
Data from Shanghai Uwin Real Estate Information Services Co showed that Shanghai’s home sales reached record levels for pricing and volume for the second straight month. The average new home in China’s commercial hub sold for RMB 24,932 — an annual increase of 14.2 percent.
“Robust sales registered in both September and October demonstrated very solid demand from end-users,” said Huang Zhijian, Uwin’s chief analyst.
Real Estate Prices Rise Across China
The biggest increase in home prices among China’s major cities during October came in Shenzhen which saw a 2.83 percent rise compared to September. However, the data showed the trend to spread nationwide.
In a survey of 100 cities across the country by the China Index Academy, home prices rose 1.24 percent month on month and on a year to year basis the increase was 10.69 percent – the biggest jump in more than two years.
Government on the Sidelines for Now
While the former government had rolled out a number of policies designed to cool down real estate speculation and assure affordability of homes for a wide range of Chinese citizens, the Xi administration which came to power this year appears to be taking a different tack.
Commenting on the relatively light regulatory approach being taken this year, Michael Klibaner Head of Research Greater China at Jones Lang LaSalle noted, “In balancing between supporting economic growth and suppressing home price increases, the scales have clearly tipped toward supporting growth this year.”
Despite four straight months of accelerating prices, no measures have been announced on a national level, and Shenzhen, which had the hottest market in October, became the only major city to tighten controls when it announced last week that it would raise the minimum downpayment on homes sold to families already owning two units from 60 percent to 70 percent.
The Shanghai government indicated that it had no plans to follow Shenzhen’s lead.
At the national level, President Xi and other government leaders have remained largely silent on housing price concerns.
Price Increases Concentrated in Big Cities
While average prices increased 1.24 percent monthly among the 100 cities surveyed by the China Index Academy, there were signs that some cities were not joining the rush and that increases were concentrated in the largest cities.
Among the 100 cities surveyed, 75 reported prices increases, compared to 79 during September, and the number of cities reporting growth rates of more than one percent was only 29, with 21 cities recording drops in prices.
Following Shenzhen’s leading rate of 2.83 percent was Beijing which reported 2.56 percent price growth and Shanghai which saw prices rise by 2.35 percent compared to September.