China's home price boom spreads to more cities as investors defy curbs

March prices are up 0.5% m-o-m vs 0.4% in Feb; property investment remains elevated for the first three months of the year


NEW home prices in China rose at the fastest pace in seven months in March and price rises spread to more cities, data showed on Friday, as property demand remained red-hot despite government efforts to cool the market. Separate official data also showed property investment remained elevated for the first three months of the year, and sales soared even as authorities further tightened property curbs in dozens of major cities.

Average new home prices in 70 major cities grew 0.5 per cent in March from a month earlier, the quickest pace since August 2020 and up slightly from a 0.4 per cent gain in February, according to Reuters calculations based on data from the National Bureau of Statistics (NBS).

New home prices rose 4.6 per cent year-on-year in March, the biggest annual gain since September 2020, up from 4.3 per cent in February.

Real estate has bounced back quickly from the Covid-19 crisis as the economy recovered from the fallout of the pandemic. But a consistent rise in house prices in big cities, which is now spilling over into smaller ones, has raised concerns about financial risk and overheating.

The NBS data showed 62 cities reported monthly gains, with the number rising from 56 in February. Tier-2 cities led monthly price growth, with new home prices in those cities rising an average of 0.5 per cent month-on-month in March, the NBS said.

Big cities such as Shanghai and Shenzhen, which have seen population influx and rampant property speculation, imposed stringent regulations early this year, leading property demand to spill over into some smaller cities. But China's four tier-1 cities still contributed most of the gains in the resale home market, with monthly prices growing an average of one per cent last month in those cities.

"The data showed 86 per cent of the 70 cities saw housing prices rising in March, the most on record," said Zhang Dawei, chief analyst with Centaline.

Authorities have tightened existing curbs on the property market this year and rolled out new measures including greater scrutiny on the illegal flows of funds and fixed price references for secondary market financing.

"The core reason for the recent heat-up since end-2020 is credit policy, especially the abuse of business loans in the property market," added Mr Zhang.

China's real estate investment rose 25.6 per cent in the first quarter of the year, from a low base a year earlier, separate NBS data showed on Friday. It was up 15.9 per cent from the same period in 2019, before the pandemic struck. Property sales by floor area surged 63.8 per cent year-on-year in the January-March period, and were up 20.7 per cent from the first three months in 2019. REUTERS

READ MORE: China's GDP hits record 18.3% growth but post-Covid recovery seen losing steam


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