China’s larger cities expected to outperform in home price growth this year
May 24, 2019 (China Knowledge) - Growth in home prices among China’s larger cities is expected to outperform the national average this year, according to the Chinese Academy of Social Sciences.
A relatively short supply of new homes this year will help to push home prices up this year by up to 7.6% to RMB 9,200 per square meter while the easing of certain housing policy restrictions and local government’s support for first-home and public housing demand will help to shore up transactions.
Data released by the National Bureau of Statistics showed an increase in new home prices in 67 out of the 70 cities it tracked for the month of April with first-tier cities showing month-on-month increases widening to 0.6% from 0.2% in March. Similarly, second-tier cities also showed an increase to 0.8% from 0.6% over the same period.
This increase has led to the housing ministry issuing warnings to four cities, Suzhou, Foshan, Dalian and Nanning over possible overheating. In response, Suzhou has now imposed stricter rules on land bidding while banks in Nanjing have raised mortgage rates.
Conversely, China’s smaller cities are still facing correction pressure after rapid growth over the last few years as a tampering of shantytown redevelopment programs continues to dampen sales. This year, China only has plans to redevelop 2.85 million dilapidated homes, falling by 51% from last year.
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