Home price divergence continues in mainland Chinese cities

(SOUTH CHINA MORNING POST)More than half of mainland Chinese cities saw home prices pick up in January amid the central government’s continuous policy support to the sector, with Shenzhen remaining the biggest gainer.

Among the 70 mainland Chinese cities tracked by the National Bureau of Statistics, new home prices increased in 38 cities last month, compared with 39 in December. They dropped in 24 cities, below the 27 cities for the previous month, and were unchanged in eight.

Gainers continued to be led by Shenzhen, where new home prices climbed 4 per cent in a month and a record 51.9 per cent over the last 12 months.

Liu Jianwei, a senior bureau statistician, said the divergence in Chinese cities goes on.

“Home prices rose quickly in first-tier and some second-tier cities, but fell slightly in third tier cities,” he said, adding that the average growth of new home prices in the four first tier cities of Shanghai, Beijing, Guangzhou and Shenzhen advanced 0.5 percentage points from December, with secondary homes seeing a further 1.2 percentage points growth.

The city with the biggest house price decline in January was Shaoguan in Guangdong and Wulumuqi in Xinjiang, both dropping 0.7 per cent in a month.

The Chinese government has strengthened support for the property sector, seen as a pillar for the wider economy. The sector has been suffering from oversupply, especially in smaller cities.

More than 50 Chinese cities have started providing subsides to home buyers while the central government this month has cut the minimum required mortgage down payment and property taxes in most cities.

At the same time, leading cities include Shenzhen and Shanghai are said to be planning to tighten buying restrictions to curb market overheating.