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China housing a bright spot in soggy economy as prices gain
[SHANGHAI] New-home price growth in China accelerated slightly in April, providing a bright spot for a slowing economy being buffeted by an intensifying trade war, although rapidly rising prices may prompt some cities to tighten policies to contain a potential bubble.
Beijing has repeatedly called on local governments to take more responsibility in keeping the frothy market under control. But pent-up demand for housing, easier credit conditions and some local governments relaxing purchase restrictions may be further fanning price gains in a market where fear of missing out is strong.
The average value of new homes, excluding government-subsidised housing, in China's 70 major cities rose 0.62 per cent in April, according to data released by the National Bureau of Statistics (NBS) on Thursday. That follows a 0.61 per cent gain in March.
On the whole, it logged the 48th straight month of price increases.
Most of the 70 cities surveyed by the NBS still reported monthly price increases for new homes, and the number was up to 67 from 65 in March, signalling broadening strength in the market.
On an annual basis, home prices rose 10.7 per cent in April, picking up from a 10.6 per cent gain in March.
The jump in home prices adds to signs the rebound in the housing market is taking hold.
New-home sales by value surged 18.1 per cent last month, the fastest pace since July, data released Wednesday showed.
The solid home price growth contrasts with surprisingly weak April retail sales and industrial output data, adding pressure on Beijing to roll out more stimulus as the trade war with the United States escalates.
That leaves the property sector "as the single most important driver of the Chinese economy", said Larry Hu, head of Chinese economics at Macquarie Securities.
However, that poses a dilemma for policymakers.
Lifting curbs risks stoking a buying frenzy that pushes prices out of reach of many people, while leaving restrictions in place could tank one of the few sectors propping up the economy, making it harder for the government to reach its gross domestic product (GDP) growth target.
Critics say Beijing's pledge to flush out property speculators might have been compromised as the government ordered banks to step up support for struggling smaller companies and shore up the economy.
Most of the price gains appeared to have been driven by growth in China's four top-tier cities - Beijing, Shanghai, Shenzhen and Guangzhou. Collectively, they rose 0.6 per cent from a month earlier, quickening from a 0.2 per cent gain in March, NBS said in a statement accompanying the data.
Tier-2 cities, which include most of the larger provincial capitals, also posted gains. They increased 0.8 per cent in April on a monthly basis, compared with the 0.6 per cent gain in the previous month.
In smaller tier-3 cities, they rose 0.5 per cent, easing from 0.7 per cent in March, the statistics bureau said.
Qinhuangdao, a small port city on the coast of China in northeastern Hebei province, was the top price performer in the month, with its prices increasing 1.8 per cent on a monthly basis.
Previously, some smaller cities had quietly loosened curbs to prop up sentiment and demand.
Moody's said last month that regulatory measures were unlikely to be loosened further amid strong growth in Chinese property prices, although it expects price growth to slow during the remainder of 2019.