China’s June home prices accelerate to near two-year high

BEIJING (Reuters) – China’s new home prices accelerated to their fastest pace in almost two years in June, with buyer demand in bigger cities resilient in the face of fresh curbs against speculation, a sign more restrictions may be needed.

  • FILE PHOTO: A Chinese flag flutters in front of a residential building under construction in Huaian, Jiangsu province, China July 12, 2018. REUTERS/Stringer/File Photo
  • Average new home prices in China’s 70 major cities rose 1 percent in June from a month earlier, higher than the previous month’s reading of 0.7 percent, according to Reuters calculations based on an official survey on Tuesday.

    The monthly growth was the highest since October 2016, Reuters calculations showed, and marks 38 straight months of price gains.

    The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes. Sixty-three cities reported higher prices in January, up from 61 in May.

    Compared with a year ago, new home prices rose 5 percent, quickening from May’s 4.7 percent gain, according to data issued by the National Bureau of Statistics (NBS).

    China’s 31 tier-2 cities – which comprise sizeable provincial capitals – led the rally, with prices up 1.2 percent in June from a month ago, the bureau said in a statement accompanying the data.

    Haikou, a port city and the capital of China’s island province Hainan, was the top performer, rising 3.9 percent on-month. Price growth in Jinan, the capital of eastern China’s Shandong province, came second at 3.6 percent, NBS data showed.

    Meanwhile, price gains widened in China’s four biggest cities of Beijing, Shanghai, Shenzhen and Guangzhou, which posted an average monthly price increase of 0.6 percent, compared to 0.3 percent in May.

    The surprising resilience has highlighted market loopholes that allow buyers to skirt existing restrictions and buy in cities that have looser purchase policies.

    More than 18 Chinese cities announced various new property restrictions in June, with curbs trickling into lower-tier cities, according to China Index Academy, a property consultancy.

    Some local governments moved to restrict enterprises from property purchases since last month.

    Despite solid prices, some analysts remain cautious about future demand in smaller cities. Property investment and sales slowed in June with ongoing policy and credit tightening, even as an escalating trade row with the United States exposes the world’s second-largest economy to downside risks in the second half.

    China’s property investment posted its weakest growth in six months in June, data showed on Monday.

    Central bank data last week showed household loans, mostly mortgages, rose to 707.3 billion yuan from 614.3 billion yuan in May.

    “We believe mortgage data is the key to watch next to gauge the central government’s attitude on the sector,” Elly Chen, an economist with Nomura, wrote in a recent note.

    “It is unlikely to loosen property policies yet, but could possibly loosen credit mildly first.”

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