BEIJING (REUTERS) - New home prices in China rose at their fastest pace in five months in February, official data showed on Monday (March 15), as red-hot demand for property in the world’s-second largest economy largely eclipsed government efforts to cool the market.
Monthly house price gains were reported by the highest number of cities since August, while separate data showed property investment soared in the first two months of 2021. It comes as China has vowed to stick to its “houses are not for speculation” policy.
Average new home prices in 70 major cities grew 0.4 per cent in February from a 0.3 per cent gain in January, according to Reuters calculations based on data released by the National Bureau of Statistics. New home prices rose 4.3 per cent in February from a low base last year, after a 3.9 per cent increase in January.
Real estate, a key pillar of China’s economy, has helped fuel the country’s robust economic recovery from last year’s coronavirus-hit to output.
But an extended surge in home prices in recent months has raised concerns about speculative asset bubbles, prompting tighter regulations to close loopholes in home transactions and contain illegal fund-flows into the sector.
“Although the various regulatory debt curbs are expected to impact land acquisition by developers, investment was underpinned by the control of coronavirus epidemic and overall improving macro economy,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution.
China’s real estate investment jumped 38.3 per cent in the first two months of the year, from a low base a year earlier, separate NBS data showed on Monday. It was up 15.7 per cent from same period in 2019, before the pandemic struck.
The NBS combines January and February data to account for the seasonal distortions from the week-long Lunar New Year holiday, which can fall in either month.
The resilience of the housing market comes as China’s economy managed to grow in 2020 and is widely expected to expand more than 8 per cent this year, having succeded in getting the coroanvirus largely under control.
Tier-1 cities again led price gains, with home prices in those cities rising 0.5 per cent month-on-month in February but cooling from a 0.6 per cent increase in January, the NBS data showed.
Prices of existing homes also surged in February. Price gains were led by top-tier cities Beijing, Shanghai, Guangzhou and Shenzhen for the first time ever, said Zhang Dawei, chief analyst with property agency Centaline.
Monthly gains were reported by 56 cities - the highest since August 2020 - and up from 53 in January, the NBS data showed.
Property sales by floor area surged 104.9 per cent year-on-year in the January-February period, and were up 23.1 per cent from the first two months in 2019.
New construction starts rose 64.3 per cent on-year in the first two months of 2021, while land purchase by developers rose 33 per cent