Home prices up in lower-tier cities

Potential homebuyers look at a model of a new property project at a real estate expo in Beijing. (Photo by Kuang Linhua/China Daily)

Home prices in lower-tier cities rose faster in March and those in some first-tier cities dropped slightly as new city-specific home purchase policies took effect, according to data issued by the National Bureau of Statistics released on Tuesday.

The policies were introduced to ensure the stable and healthy development of the housing market and to curb runaway prices and speculative purchases.

Latest NBS data showed home prices in 62 of the 70 cities the authority monitored rose in March. Prices rose in 56 cities in February, and in 45 cities in January. More buyers are investing in property in lower-tier cities, helping reduce their inventory.

The impact of measures introduced in March will be further felt in this month's data to be released next month, according to the NBS.

In Sanya and Haikou, two big tourist attractions in the southern island-province of Hainan, average home prices grew more than 2 percent month-on-month. In Shenyang, Nanchang, Xiamen, Yichang and Nanchong, home prices rose more than 1 percent month-on-month. In Shanghai and Shenzhen, two top-tier cities that imposed restrictions on home purchases since the fourth quarter of 2016, house prices have been slightly declining in recent months.

March data showed that home prices grew some 0.4 percent in Beijing, which launched a series of measures against speculative buying since March 17.

A research note from Centaline Property said property transactions in Beijing reflect a significant drop in volumes in the second half of March.

New home transactions dropped almost 67 percent in the first week of April compared to the last week of March. Pre-owned home transactions dropped 10 percent, said the research note.

Prospective homebuyers seeking returns on investment in Beijing by way of property value appreciation are likely to look elsewhere in the wake of the series of measures since March 17.

The up to 60 percent down payment requirement for second homes and the ban on sales of commercial-titled apartments to individuals are having an impact on property sales in Beijing, said an online survey by the residential property department of tencent.com, a news portal.

Commercial-titled apartments are offices and stores converted into flats.

The survey polled more than 3,000 residents in Beijing. More than 80 percent of respondents said they would buy homes to live in them; and more than 50 percent said they will not rely excessively on mortgage to buy a home in the city. Less than 20 percent said they would accept monthly installments exceeding half of their household income.

The average price of new homes in the 70 cities rose 0.7 percent month-on-month in March, up from 0.3 percent in February.

This should help explain why more than 20 cities across China have tightened home purchase policies since mid-March, said Yan Yuejin, a senior researcher at the E-House China R&D Institute.