The China Index Academy (CIA) on August 31 released the home price index of 100 Chinese cities in July. Up till that month, the average home price of the 100 cities has risen for the 13th consecutive month both year on year and month to month, and the rise continues to expand.
According to the CIA’s statistics on the newly built residential houses in the 100 cities, in August 2016, the average new home price of the 100 cities was 12,270 yuan per square meters, up 2.17 percent from the previous month, and the increase is 0.54 percentage points higher than that of last month; the average price has increased by 13.75 percent year on year, and the increase was 1.36 percentage points higher than that of last month.
It is the 13th consecutive month that the average price has increased both year on year and month to month. Of the 100 cities, the home prices of 68 rose, 29 fell and 3 kept flat compared with the previous month. Two more cities saw increased home prices in August when compared with July, and 36 cities recorded more than 1 percent growth, increased by 7 from July. One less city posted month to month decline in August, and two cities saw the decline of more than 1 percent, the same as July.
The median of home prices of newly built houses in the 100 cities was 7,112 yuan per square meters, down 0.13 percent month to month and up 0.94 percent year on year. In addition, the average price of the ten largest cities such as Beijing and Shanghai was 23,568 yuan per square meters, up 2.72 percent month to month and 18.06 percent year on year, 0.52 percentage points and 0.87 percentage points higher than the previous month respectively.
The CIA pointed out that the overheat of the overall housing market continued in August, as the 100 cities saw expanded year on year and month to month growth in terms of the average home price. Cities with soaring home prices mainly concentrated in the Yangtze River Delta, Pearl River Delta and the Bohai Rim. In August, the National Development and Reform Commission (NDRC) proposed to further promote sound development of property investment, and encourage different cities to implement varied policies to strengthen macro adjustment. After that, populous cities have constantly made greater efforts in adjusting polices on the housing market. Suzhou and Nanjing municipal governments have raised the percentage of down payment for the second home, and changed the land auction manner, to restrain the rise of home prices; Changsha City and Urumqi City, which face huge pressure on reducing housing inventory, have taken measures, such as relaxing housing provident fund lending policy and providing fiscal subsidies, to stimulate demand, encouraging the consumption of housing inventory.
As to land supplies, land kings, namely land parcels with extremely high prices, frequently occurred in first and second tier cities in August. It pushed land price higher and raised the expectation for the upbeat of home prices, driving property enterprises to increase the selling prices. While in terms of demand, transactions in core cities were still active, and continued to transmit to neighboring cities.
The CIA is in the view that when overheat of the housing market of core cities shows no signs of diminishing, adjustment on the real estate industry will be further strengthened. At the same time, as the transmission effect in the market keeps emerging, more cities will likely join the ranks of tightening policy. But since September and October are traditional peak season for the housing market, the supply and demand will overall surge, and the up-trend of the home prices is expected to continue.
Translated by Adam
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