As the year-end is approaching, local governments are trying to bring down home prices to meet their control targets set at the beginning of the year, but the market stayed red-hot in terms of both prices and volume. Total transacted residential floor area in November jumped 28 percent m-o-m to 131 million square meters, reaching the year high since January 2013. In first-tier cities, home sales remained stable in November, and total transactions floor area in the four cities finished the month 3 percent higher at 5.1 million square meters.
Despite all the cooling measures, home prices continue to grow for the 10th consecutive month in November, with the year-on-year growth rate of new home prices in 70 major cities further accelerating to 9.9 percent, compared with 9.6 percent in October and 9.1 percent in September. On a monthly basis, prices rose only 0.5 percent, slowing from 0.6 percent in October and 0.8 percent in August. According to data from the National Bureau of Statistics, 66 of tracked cities saw price rises in month-on-month basis, one city saw prices drop and three remained unchanged.
Home prices rose the most in first-tier cities and most of them remained on the uptrend in November. Of which, Shanghai continued to lead China’s home price gains with the city’s new home prices further edging up from 21.4 percent to 21.9 percent. Beijing continued to secure its second place, with the home prices 21.2 percent higher than they were a year ago, but it is also the only first-tier city that saw the growth slow on a monthly basis. In southern China, Guangzhou gained 20.9 percent and Shenzhen gained 21 percent, respectively. Comparatively, in second-tier cities such as Tianjin, Nanjing, Chengdu and Qingdao, home prices grew in a more moderate manner, ranging from 8 percent to 15 percent.
We expect the momentum to slow down in December as local governments may impose more curbs to cool off the market. 13 cities already have new tightened policies rolled out in November and all four first-tier cities have raised downpayment requirements for second-home buyers from 60 percent to 70 percent, along with other measures such as longer hukou requirement and stricter financial criteria for mortgage application.