China’s National Bureau of Statistics (NBS) released its monthly report on home sale prices (LINK). The prior segregation of “15 Hot Cities” in the NBS report has been removed and suggests that price restraints have diminished in importance as a policy goal. It is still useful to monitor trends in these major markets.
Intense market restrictions kept prices flat for many months in these key markets, but the average has recently been boosted by a clear rebound in some of the Tier 2 cities (e.g. Jinan, Chengdu, and Wuhan) and emerging strength in top markets (Hangzhou and Guangzhou). It’s possible that some of the reported price increase could reflect sales mix as cities may have relaxed registrations of high priced sales.
Segregating the 10 strongest and weakest of the 70 markets covered by NBS data shows a few large Central cities (Xi’an Shijizhuang and Jinan) on the gainers list along with policy beneficiaries (Haikou and Dandong) and former laggards (Hohhot etc…) Xi’an has attracted population inflow (and homebuyer demand) with generous benefits for skilled workers (see WSJ: A Tug of War for Elite Skills Is Raging Across China. The weakest prices have been in large and formerly hot markets with strong economies, growing populations, and cultural appeal that should sustain long-term housing demand.
Even the weakest market in the 70 city survey has flat prices over the past 12 months. Data is scarcer, but falling prices have been reported in some smaller cities not represented in the survey. Easing of downpayment requirements, mortgage rates, and resale limitations is occuring depending on local conditions. The recent announcement that urban residency requirements will be gradually relaxed should provide a significant boost to demand. Analysts expect relative 2019 strength in Tier1/Tier2 markets and the cities benefiting from the Greater Bay Area development plan (see SCMP coverage for background).
Koneko Research 