(Bloomberg) -- New home price growth in China quickened last month after government measures to spur demand in smaller cities took effect. The average value of new homes in 70 major cities around Asia’s biggest economy, excluding government-subsidized housing, rose 0.71% in May, according to data released by the statistics bureau Tuesday. That’s faster than an increase of 0.62% in April and a lift of 0.61% in March.
Key Insights The gains follow a robust April during which home prices grew at the fastest pace since at least December and sales jumped. A market that’s holding up may be just what Beijing is aiming for: A relatively strong sector to underpin the economy at a time China is at odds with the U.S. over trade, but not one that’s overheating Big home price gains were more frequent on an individual city basis. In May, 12 cities saw price gains of more than 1%, versus six in April. That’s despite China’s housing ministry putting four cities on alert last month after noting a surge in dwelling values In China, it’s now become pretty routine for local authorities to finetune housing policy on an individual city or town basis. In May for example, authorities in Nanjing and Zhuhai made it easier for people to get residency permits, buoying buyer demand This micro finetuning could be good news for developers, which generally want to sell quickly to avoid being caught in any downturn. The strength also comes at a time regulators are taking fresh steps to curtail some of the more aggressive real estate firms’ fundraising plans
Get More May’s increase was largely driven by Tier 2 and Tier 3 cities, where prices accelerated 0.77% and 0.69% respectively The fastest growth -- at 2% -- was in Xi’an, the Shaanxi provincial capital home to China’s famous terracotta warriors. It’s allowed all non-locals that hold an undergraduate degree to apply for a residency permit known as a “hukou,” entitling them to purchase a home in the city Prices in bigger, so-called Tier 1 centers such as Beijing and Shanghai gained a more modest 0.43% Home sales momentum, perhaps surprisingly, weakened in May, up just 3.9% by value from a year earlier -- the mildest pace in 18 months, calculations on official data show For more detail on Tuesday’s data, click here
To contact Bloomberg News staff for this story: Emma Dong in Shanghai at [email protected]bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at [email protected]bloomberg.net, Peter Vercoe
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