BEIJING • Prices of China's new homes accelerated last month, led by gains in smaller cities, suggesting a key driver of the country's economic growth remained intact despite slower investment and increasing economic headwinds.
Average new-home prices in China's 70 major cities rose 1 per cent in October from a month earlier, a touch higher than the previous month's reading of 0.9 per cent, according to Reuters calculations based on an official survey.
While solid growth in the sector could cushion the impact of a vigorous multi-year government crackdown on debt and escalating trade tensions with the United States, it could also stoke fears of a bubble if prices climb too quickly.
The data indicates the 42nd straight month of price increases, the Reuters calculation showed, defying tougher curbs designed to rein in a near-three-year real estate boom that has spilled over from mega cities to the hinterland.
In a sign that strength remains broad-based, 65 out of the 70 cities surveyed by the National Bureau of Statistics (NBS) reported a monthly price increase for new homes, compared with 64 in September.
Compared with a year ago, new-home prices rose 8.6 per cent last month - the fastest pace since July last year and quickening from September's 7.9 per cent gain - according to data issued by the NBS.
China's property market has been relatively resilient, despite tighter property curbs, as many investors exploited regulatory loopholes and turned to smaller cities facing fewer restrictions.
Some speculators are also betting that local governments, which rely on revenue from real estate, will be reluctant to overly tighten the regulatory screws in the sector.
China's 35 tier-3 cities reported an average price increase of 1.1 per cent, accelerating from 0.9 per cent in the previous month, while its 31 tier-2 cities - which comprise sizeable provincial capitals - saw a price increase of 1 per cent in October from a month ago, the bureau said in a statement accompanying the data.
China's four biggest cities - Beijing, Shanghai, Shenzhen and Guangzhou - posted no change in their average monthly prices. The south-western city of Guiyang was the top performer, rising 4.2 per cent on month, NBS data showed.
However, signs of a slowdown in the property sector - a key driver of gross domestic product - are emerging, with growth in China's real estate investment in October cooling to a 10-month low and home sales falling again, as developers held back expansion plans in the face of broadly softening economic conditions.