China’s National Bureau of Statistics (NBS) released its monthly report on home sale prices (LINK). The report provides less coverage and less detail than the private Fang/Soufun 100 city index whose release has been suspended. Increased government control over price data seems to be an intangible measure to cool speculation.
The NBS report still provides some insight into the impact of housing market restrictions introduced in leading Chinese cities. Continued strong demand explains why restrictions were extended in March to cover over 60 cities, but there is no official list. The segregation of “15 First-tier Cities and Hot Second-tier Cities” in the NBS report implies that they will be the primary focus of government policy:
Under the present circumstances lower prices are good news because they mean it will not be too long before restrictions are eased and successful property developers can return to a normal operating environment. Unfortunately it’s hard to force prices to meet the government mandate of zero increase when nominal GDP and money supply are both rising at annual rates over 10% and per capita disposable income is up over 8%. Resilience of prices amid intensifying restrictions reflects strong fundamental demand. Shanghai recently deemed it necessary to introduce a lottery system for allocation of scarce supply (LINK).
By September the base comparison for year-over-year changes will be high enough that the reported annual change in the 15 focus markets will be under 10% and the environment may begin to normalize. Rising purchases of land by developers (LINK) may raise the supply of homes for sale late in the year and help to balance the market in many cities. For longer time perspective on China real estate see China Property: Hot or Not?