China’s housing market in August stayed low ahead of the traditional hot season nicknamed “Golden September and Silver October”. Total sales of residential property in China amounted to 86.6 million square meters in August, in line with that in July.
In first-tier cities, total home sales was up marginally by 5% month-on-month to 4.5 million square meters, versus 4.3 million square meters in July. Of which, home sales in Shanghai rebounded strongly after a 40% plunge in July, totaling 1.7 million square meters, up 32% month-on-month. Other first-tier cities recorded varying degrees of declines in August: Beijing’s home sales fell 3.3% month-on-month to 1.2 million square meters; Guangzhou fell 11.7% and Shenzhen fell 2.1%.
New home prices in 70 major cities, tracked by the National Bureau of Statistics, posted the eighth straight month of gains in August with a 8.3% year-on-year increase, higher than 7.5% in July and is the biggest increase in the past two years. Among all 70 major cities, 66 of which reported month-on-month new home price gains in August, up from only 62 in July. 2 cities saw new home prices falling and 2 remained unchanged.
Over-demand and a lack of supply in first tier cities continued to drive home prices higher in August. Many new high-end projects were snapped up overnight in Shanghai and new home prices reported the largest increase in August, with that rising 15.4% year-on-year in August versus a 13.7% gain in July. Beijing’s new home prices rose 14.9% year-on-year in August, compared with 14.1% in July. In Guangzhou, new home prices rose 18.8 percent compared with a year ago, while that in Shenzhen also rose 18.1%.
However, given the challenges of achieving the 7.5% growth rate in GDP for 2013, the Government seems to have a higher tolerance to rising property price, especially after new leaders took office in March. The subtle policy changes in the property market show that the Government is unlikely to roll out further property cooling measures in the short term.