New Home Prices Rise, Hold Steady in Five More Major Chinese Cities in April

(Yicai) May 19 -- The number of major Chinese cities seeing their new house prices increase or remain unchanged in April increased to 21 from 16 the previous month, according to the latest official data.Prices of new homes in first-tier cities rose 0.1 percent in April from the month before, compared with a month-on-month growth of 0.2 percent in March, according to data released by the National Bureau of Statistics yesterday. They inched up 0.4 percent in Shanghai and 0.1 percent in both Guangzhou and Shenzhen, but they fell 0.2 percent in Beijing.Shanghai was the only first-tier city to post a year-on-year increase in new home prices in April, up 3.7 percent.In second-tier cities, new house prices slid 0.1 percent last month from March, narrowing the decline from 0.2 percent the previous month. In third-tier cities, they fell 0.3 percent month-on-month both in April and March.Major Chinese cities are expected to maintain their recovery momentum in May, said Cao Jingjing, general manager of the index research division at China Index Academy.Pre-owned house prices in first-tier cities increased 0.4 percent in April from the previous month, according to NBS data. They rose 0.4 percent in Beijing, 0.7 percent in Shanghai, 0.2 percent in Guangzhou, and 0.3 percent in Shenzhen.In second- and third-tier cities, second-hand home prices fell 0.2 percent and 0.3 percent, respectively, in the period.Year on year, prices remained in negative territory overall, though the pace of the decline narrowed. First-tier cities saw pre-owned home prices fall 6.8 percent in April from a year earlier, compared with a 7.4 percent drop in March.The month-on-month decline in second-hand home prices across 70 key Chinese cities narrowed for the fourth consecutive month in April, while the year-on-year drop shrank for the first time in eight months, said Yan Yuejin, deputy director of the E-House China Research and Development Institute.This improvement is mainly due to the easing policy effects being stronger now than last year, improved value-for-money following deep price corrections, and rising buyer confidence, Yan noted.The convergence of second-hand and new home prices is an important signal, said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center. This puts an end to the previous pattern of ‘second-hand prices declining faster than new home prices,’ which had weighed on market expectations, he noted.As new home inventory drops to historic lows, quality supply is stimulating upgrade demand, and stabilizing second-hand prices are releasing pent-up first-time buyer demand, Li explained, adding that he expects this dynamic to persist this month.The divergence between new and second-hand markets is likely to persist in the near term, with pre-owned home sales continuing to grow at a faster pace, buoyed by first-time buyer demand, and new home recovery remaining concentrated in quality projects in core cities, Cao said.Editor: Futura Costaglione