Latest data shows average new home prices in China’s 70 major cities rose the most since January 2011 for the month of August. The increase was led by sharp price spikes in first tier cities such as Beijing, Shanghai and Shenzhen.
All except for one of the 70 cities tracked by the the government saw their new home prices increase compared with a year earlier. In terms of transaction volume, July and August are traditionally a slower time for sales, but we have seen strong sales in the past couple of months. There was a slight dip in sentiment after the March curbing measures were announced.But after that, we have been seeing a gradual, and steady recovery of both transaction volume and pricing.
Policy makers have not introduced further measures to cool the property sector since the leadership transition. Market sentiment has been strong on expectations that the government will not implement further measures anytime soon. Analysts say that home prices will continue to increase steadily in major cities as September and October are the traditional peak season for property sales in China.
Average new home prices of 70 major Chinese cities increased 8.3 percent year on year. That marks the biggest rally since January 2011.
Prices are also higher compared on a monthly basis, with August home prices rising eight tenths of a percent versus July.
Analysts say that steady growth in prices allow people to protect their wealth and hedge inflation and is in line with the government’s efforts to curb speculation.
One of the broad objectives of all the measures the government introduced around the residential market is to restructure the residential housing sector, not just to control prices. Chris says that China’s real estate industry will continue to go through a period of evolution as the government introduces further reforms.