More encouraging news from China with house prices rising more strongly in August than many analysts had forecast (or the Chinese government had believed).
The rise continues to be led by rapid price escalation in big cities like Shanghai and Beijing, but medium and smaller cities also saw solid rises last month.
The news is further confirmation the Chinese economy is doing a bit better than previously believed – a situation that fits with the investment, production, retail sales and trade data for August.
The average price of new homes in 70 cities rose 7.5% in August from a year earlier, up from a 6.3% on-year increase in July, according to calculations by The Wall Street Journal based on data released by the National Bureau of Statistics. But an estimate from Reuters was more optimistic. It reported that overall, prices of new residential buildings rose 9.2% year-on-year in August, according to a weighted average from based on the statistics bureau data, up from growth of 7.9% in June.
On a month-over-month basis, the average new home price climbed 1.3% in August, compared with a gain of 0.7% in July.
Prices of new homes built by private-sector developers, excluding government-subsidized housing, rose in 62 of 70 cities in August from a year earlier, compared with 58 cities in July. Prices of new private homes increased in 64 of 70 cities in August on month, compared with 51 in July.
The same top ten major cities drove much of the price growth in annualised terms, as in previous months: Xiamen, which has revealed a tightening in home buying rules, topped the list at growth of 43.8% growth in August, up from 39.2% for Shenzhen in July.
Other major cities also saw sharp rises in prices – Hefei (40.3%), Shenzhen (36.8%), Nanjing (36.7%), Shanghai (31.2%) and Beijing (23.5%).
The most rapid month-on-month growth in August came from Hangzhou, up 5.5% and topping July’s top rate of 4.6% from Xiamen, according to Reuters.
The Financial Times pointed out that the pricing data “undercut a claim by China’s statistics bureau chief Sheng Laiyun, who said last month the “high-growth period is over” for the country’s housing prices, citing data that showed real estate investment and sales for the year to date had slowed for the third straight month in July."
Last week’s investment data showed that property investment rose 6.2% in August on-year, according to Reuters calculations, compared with 1.4% in July, while sales by floor space grew 25.5%. (The Financial Times said growth was around 5.4% annual in August)
"Property sales continue to expand at a rapid pace. We are skeptical how long this can last given that fundamental factors point to housing demand growth in the low single digits,” Capital Economics economist Julian Evans-Pritchard wrote in a note to clients last week.
China’s National Statistics Bureau data released showed cumulative real estate sales in value terms came in at Rmb6.662 trillion (US$997.6 billion) for the first eight months of the year, up 38.7%. In volume terms, floor space sold during the same period grew 25.5%.
