New home prices in China continued their upward momentum in December, although the recovery remains uneven across the country, even within first-tier cities.
Month-on-month increases were recorded in 39 of the 70 cities measured, up from 33 in November, the National Bureau of Statistics said on Jan 18.
On a year-on-year basis, prices in the 70 cities rose an average of 7.7 percent in December from a year earlier, quickening from November’s 6.5 percent rise, the bureau said. However, 49 cities saw a decline in prices compared with a year ago.
Losses in most cities were offset by strong gains in the largest cities. Among first-tier cities, Shenzhen saw the biggest gain with a 3.2 percent increase over November and a 47.5 percent surge over a year earlier. Shanghai rose 2.1 percent, up 18.2 percent from a year ago.
But Beijing at 0.5 percent and Guangzhou at 0.7 percent were more modest increases.
Fueled by stimulus measures such as lower down-payment requirements, new home prices have been rising since May. Five interest rate cuts last year helped to bring mortgage rates to their lowest in five years.
The divergence was also reflected in sales. Of the 50 cities monitored by the China Real Estate Index System, sales in first-tier cities surged 34.2 percent (as measured by floor space) in December over November, but in second-tier cities sales rose just 7.9 percent. Those in third-tier cities rose 10.6 percent.
“Shenzhen’s price hike starting in November was largely driven by speculators who borrowed money to buy homes. The 47.5 percent year-on-year growth is really rare in the past 20 years,” said Yang Hongxu, deputy head of the E-house China R & D Institute.
The continued drawing down of the housing inventory, along with the central government’s pledge to further cut the housing glut next year, has pushed expectations of further rises in prices and sales in 2016.
Other agencies, such as Moody’s Investors Service, are less sanguine, expecting a 0 to 5 percent growth in the value of property sales nationwide.