The National Bureau of Statistics (NBS) published its recent research on residential property prices of the 70 mid- to large-cities in the country on 18th May. 65 of the 70 studied cities showed an m-o-m property price increase (not including indemnificatory housing units) in the primary market in April (62 were recorded in March) and 5 showed a falling price (8 were recorded in March). On a y-o-y basis, 46 cities showed a price rise (40 were recorded in March), 23 showed a price reduction (29 recorded in March), while 1 remained at similar levels (1 recorded in March). Although the number of cities showing an m-o-m price increase went up in the month, the degree of increase has changed. The extent of m-o-m price increase of the 4 Tier-One cities have reduced while that of Tier-Two and Tier-Three cities rises. On the other hand, that of yearly price increases of Tier-One and Tier-Two cities continued to rise while prices of some of the Tier-Three Cities changes from falling to rising.

The data above were recorded in the month just after the 325 cooling measures were implemented in Shanghai and Shenzhen. Despite the rise in the numbers of cities with price increases, the degrees of increases in different cities have shown a structural change. Some analysts suggests that the rise in demand for Tier-Two-city properties is a result demand for Tier-One cities flowing into Tier-Two cities, with some Tier-Two cities now seeing greater increases in prices than that is seen in Tier-One cities. According to the NBS, the average m-o-m price increase of Tier-One cities have fallen 0.7 percentage points from March’s figure, while price increases for Tier-Two and Tier-Three cities have risen for 0.3 and 0.2 percentage points from March’s figures respectively. The price increase for Tier-One cities in both the primary market and the secondary market has fallen in the month, with Shenzhen even showing a 0.4% price fall in its secondary market.

Less affected by developers’ selling tactics and participated by many home-owners, the secondary market is often a better reflection of the overall property market sentiment of a city. Some studies show that the fall in prices recorded by the NBS in Shenzhen’s secondary market does not fully reflect the severity of the hit on the city’s market sentiment. Instead, studies show that, since the implementation of the 325 cooling measures, asking prices of over 60% of the properties on sale in the 125 districts of the city has been lowered, with the situation in Futian being the most serious, where 96% of the asking prices were voluntarily lowered, whereas, Songgang saw the greatest reduction of all regions, where price cuts of up to 39% have been seen.