China’s home prices rose at a faster pace in August, suggesting that tightening measures imposed by a growing number of cities on overheated markets have yet to show significant effects.
A robust recovery in home prices and sales, thanks to a flurry of government stimulus measures, gave a stronger-than-expected boost to the world’s second largest economy this year, but eye-popping home price rises in bigger cities have raised fears of overheating.
Average new home prices in 70 major cities climbed 9.2% last month from a year ago, accelerating from July’s 7.9% rise, according to Reuters calculations based on data from the National Statistics Bureau (NBS) on Monday.
The NBS data showed 64 of 70 major cities tracked by the NBS saw year-on-year price gains, up from 51 in July.
Prices in second- and third-tier cities are rising at an alarmingly sharp rate, and speculation was rising that more cities would impose more stringent controls to discourage overeating.
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The coastal city of Xiamen outperformed long-time top performer Shenzhen and had the sharpest price spike, with prices surging 43.8% from a year earlier, faster than the 39.2% rise in July.
The inland city of Hefei was the second-fastest growing market according to the survey, with prices rising an annual 40.3% in August, versus a 33.8% gain in July.
With the buying frenzy spilling over from first-tier cities to other parts of the country, more affluent second- and third-tier cities such as Xiamen, Nanjing and Wuhan have stepped up restrictive measures, hoping to deter speculators and cool prices.
Housing authorities from the eastern city of Hangzhou announced on Sunday that it will begin to restrict home purchases as of Sept. 19. Families who are not registered as residents and already own one or more houses in certain districts cannot purchase another home, either new or pre-owned.
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Prices in the southern boomtown Shenzhen rose 36.8% from a year ago, slowing from 40.9% in July. Shanghai and Beijing prices rose 31.2% and 23.5% on-year, quickening from 27.3% and 20.7% in July. Month-on-month gains rose to 3.6% and 3.5% from 1.2% and 1.5% in July.
First-tier cities such as Shenzhen and Shanghai have tightened downpayment requirements for second homes and raised the eligibility bar for non-residents to purchase properties.
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Despite signs of a broadening recovery, many small cities still have a large glut of unsold homes. Prices in the rustbelt city Dandong recorded the biggest fall at 2.1%, compared with 2.4% in July.
Official data showed that mortgage loans remained the major driver of China’s overall loan growth, accounting for more than 70% of bank loans in August. The rapid rise in property loans over the past few months has been a notable cause of concern among analysts.
Investment growth in Chinese real estate picked up in August on a yearly basis following a gradual decline since April, suggesting that investors are still optimistic of a booming property market.
