Sizzling home price rises in China’s biggest cities showed signs of easing last month, but sharp gains appeared to be spreading to smaller cities, making policymakers’ job harder as they look to support the faltering economy without inflating bubbles.
Average new home prices in 70 major cities climbed 6.9 percent last month from a year ago, accelerating from April’s 6.2 percent rise, according to Reuters calculations based on data from China’s National Statistics Bureau (NBS) yesterday.
The NBS data showed 50 of the 70 major cities it tracks saw year-on-year price gains, up from 46 in April.
“The average [price] growth of new homes in first-tier cities started to narrow, while it continued to widen in second and third-tier,” senior NBS statistician Liu Jianwei (劉建偉) said.
Shenzhen remained the top performer, with prices surging 53.2 percent from a year earlier, slower than the 62.4 percent rise in April.
However, on a month-on-month basis, prices were up just 0.5 percent after April’s 2.3 percent rise, evidence that property cooling measures recently introduced by some big cities are starting to bite.
Shenzhen and Shanghai have tightened down payment requirements for second homes and raised the eligibility bar for non-residents to purchase properties.
Shanghai prices rose 27.7 percent year-on-year, easing from 28 percent in April. The monthly gain cooled to 1.9 percent from 3.1 percent.
While the cooling trend in megacities might be good news for policymakers in Beijing, the survey showed sharp price rises are spreading to other parts of the country.
Xiamen surpassed the top-tier cities and saw the second highest price rise of 28 percent. Prices in second-tier cities Nanjing and Hefei also rose more than 20 percent, higher than the 19.5 percent seen in Beijing.
The spillover of higher prices to major second-tier cities is fuelling speculation that local governments there might also tighten restrictions on home purchases soon.
The government of Tongzhou, the eastern suburban district of Beijing, tightened rules last month on purchases of second homes. The eastern cities of Nanjing and Suzhou have put limits on how much developers can offer in land auctions.
Liao Qun (廖群), chief economist of CITIC Bank International (中信銀行國際) in Hong Kong, said he did not expect widespread tightening across the country just yet, saying overall prices in second-tiers were still well below those in top cities.
Some small cities that have a glut of unsold homes might even need continued support to encourage homebuyers, he added.
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