2016-07-18

China Real Estate Turns, New Home Prices Rise 0.7 pc

New home prices rose 0.7 percent in June, but the turn discussed in recent Chinese media articles and reflected in credit growth is evident in the count of cities with rising, falling or flat home prices:

New home prices are up 5.5 percent year-on-year.

The turn in the market is also evident in a re-concentration of price increases in the top cities. The top-tier cities and Xiamen accounted for 27 percent of the increase, up from 21 percent in May. The second-tier hot cities of Nanjing, Hangzhou, Wuhan, Hefei, Fuzhou, Huizhou and Tianjin accounted for 36 percent, up from 35 percent in May.

Largest increases in June: Hefei 4.8 percent; Xiamen 4.7 percent; Nanjing 3.8 percent.

Trend in home prices broken down by size: in Beijing, Shenzhen and Guangzhou, the largest apartments saw the largest price increases. In the second-tier hot cities, the smallest more often saw the largest price increases.

Existing home prices increased 0.5 percent in June. Only 48 cities saw price increases, down from 49 in May.

The top-tier 5 and second-tier hot 7 accounted for 32 percent and 33 percent, respectively, of the national price increase. In the past year, these 12 cities accounted for 79 percent of the rise in home prices.

Takeaway: given the trends in credit growth (China TSF Growth Slows in June; M2 Growth Still in Downtrend), buying restrictions on both home buyers and developers, a slowdown in home prices is coming unless the third- and fourth-tier pick up the slack.

NBS: 2016年6月份70个大中城市住宅销售价格变动情况

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