China’s new home prices rise further in December, recovery patchy
BEIJING – China’s home prices continued to rise in December 2015, adding to signs of improving in the housing market, although the recovery remains uneven across the country.
Average new home prices in 70 major cities rose 7.7 percent in December from a year earlier, quickening from November’s 6.5 percent rise, the National Bureau of Statistics(NBS) said on Monday.
Even a mild recovery in the housing market would ease concerns of an acute slowdown in China’s economy, which is expected to show its weakest growth in 25 years in 2015.
The NBS data showed on-month price rises were seen in 39 of 70 major cities tracked by the NBS, up from 33 in November.
Big cities led the prices gains again in December, with Shenzhen being the top performer. Home prices there rose 46.8 percent from a year ago, NBS data showed.
Home prices’ strong gains in big cities were in sharp contrast with performance in small cities. Average home prices in third-tier cities still fell year-on-year in December, it added.
A Reuters calculation based on NBS data showed China’s new home prices rose 1.6 percent in on-year terms, marking the third month of year-on-year gains in a row.
Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, only giving home price changes in each of 70 major cities. But it started to provide nation-wide data occasionally in recent months.
Still, rising home prices have yet to revive a recovery in property investment and construction as a huge overhang of unsold homes discourages developers from launching new projects.
Official data showed property investment, a crucial driver of the economy, grew just 1.3 percent in the first 11 months of 2015 from a year earlier, the lowest rate since early 2009.
China’s top leaders have made reducing excess stock in the housing market a key task for in 2016, although a plan to encourage migrants to buy unsold homes in lower-tier cities faces challenges.
Most of China’s unsold homes are in third- and fourth-tier cities, where cash-strapped local governments rely on land-sales revenues as their main income, and have been hit by migration to larger centres.
Some analysts estimate it could take at least two years to clear the glut.
While property prices in small cities are still falling, a rebound is under way in the biggest cities, bringing with it the return of land speculation that could stoke another bubble and widening the economic gap between “Tier 1” centres and the others. -Reuters