BEIJING (REUTERS) – Prices for new homes in China rose at the fastest pace in the last seven months in March, and price growth has spread to more cities, data showed on Friday (April 16th), while demand for real estate remained hot despite efforts governments to cool the market.
Separate official data also showed that real estate investment remained elevated in the first three months of the year, and sales rose even as authorities further tightened property restrictions in dozens of major cities.
Average house prices in 70 major cities rose 0.5 percent in March from a month earlier, the fastest pace since August 2020, and rose slightly from a 0.4 percent rise in February, according to Reuters calculations based on data from the State Bureau for statistics.
New home prices rose 4.6 percent year-on-year in March, the biggest annual gain since September 2020, up from 4.3 percent in February.
Real estate, a key pillar of China’s economy, quickly recovered from the COVID-19 crisis as the economy recovered from the effects of the pandemic. But the steady rise in house prices in big cities, which is now spilling over to smaller ones, has raised concerns about financial risk and overheating.
NBS data show that 62 cities reported monthly gains, and that number rose from 56 in February.
Level 2 cities led the monthly growth of prices, and the prices of new houses in those cities in March increased on average by 0.5 percent on a monthly level, the NBS said in a statement.
Large cities such as Shanghai and Shenzhen, where there has been an influx of population and widespread speculation about property, introduced strict regulations earlier this year, leading to a spillover of demand for property to some smaller cities.
But four Chinese first-tier cities still contributed to most gains in domestic market resale, with monthly prices rising an average of 1 percent in those cities last month.
“The data showed that in 86 percent of the 70 cities, apartment prices rose in March, the most recorded,” said Zhang Dawei, chief analyst at Centaline real estate agency.
Authorities tightened existing restrictions on the real estate market this year and introduced new measures, including greater control over illegal asset flows and reference prices to fixed prices for financing in the secondary market.
The housing ministry has also been on inspection tours or talks with 13 cities since the beginning of this year, telling local governments to take more creative measures to curb speculation.
“The main reason for the recent warming since the end of 2020 is credit policy, especially the misuse of business loans in the real estate market,” Mr Zhang said.
Chinese real estate investment rose 25.6 percent in the first quarter of the year, from a low base a year earlier, separate NBS data showed on Friday. It was 15.9 percent higher than the same period in 2019, before the pandemic hit.
Sales of property by area increased by 63.8 percent year on year in January-March and increased by 20.7 percent compared to the first three months of 2019. Analysts noted that sales of houses by value in March were the highest in the same period recorded.
The beginnings of new construction rose 28.2 percent year-on-year in the first three months of 2021, while funds raised by developers rose 41.4 percent.