BEIJING • Prices in China's sizzling property market, a major driver of growth in the world's second-largest economy, accelerated last month on a monthly basis, shaking off the impact of recent cooling measures introduced to dampen speculative demand.
Average new home prices in China's 70 major cities rose 0.6 per cent last month from February, higher than the previous month's reading of 0.3 per cent, according to Reuters calculations based on an official survey yesterday.
The National Bureau of Statistics, which published the report, said yesterday while prices in 15 major cities appeared to be "stable" on-month, price growth for new homes in smaller third-tier cities quickened 0.4 percentage points.
Economists say more tightening measures are likely as price momentum builds, but with price gains and sales in top-tier cities appearing to be peaking, future curbs are likely to be more targeted.
"I think the tightening focus will shift to more medium- and small-sized cities in the future because sales have fallen quite significantly in first-tier cities," said Mr Zhou Hao, an economist at Commerzbank in Singapore.
0.6% Percentage increase in average new home prices in China's 70 major cities last month from February, up from the previous month's reading of 0.3 per cent
Compared with a year ago, new home prices in 70 cities rose 11.3 per cent, slowing from February's 11.8 per cent gain.
As the tough measures to cool real estate prices fail to deter investors, China is now home to the world's hottest property stocks. Chinese companies account for nine of the 10 best performers this year on the Bloomberg World Real Estate Index.
Among members of the MSCI China Index, Country Garden Holdings, Sunac China Holdings and China Evergrande Group are the standout winners with gains of more than 70 per cent, five times the pace of the benchmark measure.
Soaring sales and improving profits go some way in explaining a surprise rally that has pushed the shares into overbought levels, lifted valuations and forced short sellers to retreat.
Sharper price gains highlight the challenge the authorities face in taming an overheating market without bursting a speculative property bubble. "Most of the (tightening measures) are quite marginal. Tightening is not as serious as previous cycles," said Gavekal Dragonomics property analyst Rosealea Yao.
Prices for new units in Beijing rose for the first time since October last year on a monthly basis and rose 19 per cent from a year ago. Shanghai's and Shenzhen's prices declined on a monthly basis although Shenzhen's fall was not as large as the previous month.
Despite the curbs and signs of price moderation, investors remain bullish about China's biggest cities. "I think Beijing prices will definitely rise further. The curbs are oppressing the market but prices may double next year (when the curbs are removed)," property investor Xu Zhenghua said.