Adding to evidence that China’s residential property market is picking up steam, new home prices grew for a fifth consecutive month in September, rising 0.3% from August.
The increase saw the annual decline in new home prices moderate to 0.9%, the slowest fall reported since August last year.
The annual figure was an improvement on August’s 2.3% decline and significantly less than the 6.1% drop seen in the 12 months to April.
Large tier one cities led the price recovery, which has been the case for several months.
New property prices in Shenzhen, home to the hottest of the hot stock markets up until June, recorded price growth of 37.6%, above the 31.3% gain seen in the year to August and far and away the fastest pace of growth among major mainland cities.
Elsewhere new home prices in Shanghai jumped by 8.3% from 5.6% in August while those in the capital – Beijing – increased by 4.7% from 12 months earlier. Overall tier one cities recorded annual price growth of 13.9%, up from 10.4% in August.
While tier one city prices continued to push higher, price growth in smaller cities remained entrenched in negative territory. According to analysis conducted by Westpac, prices fell by 1.8% in tier two cities, an improvement on the 2.9% decline of August, while price in tier three cities and below contracted by 3.4% from 4.4% seen previously.
The chart below, supplied by Westpac, shows the increasingly divergent performance in new home prices across the country.
While clear that home prices in larger Chinese cities are picking up steam, according to Huw Mackay, senior international economist at Westpac, the spillover effect from price gains in larger cities to the smaller, less wealthy jurisdictions where excessive developer inventory is most pronounced is yet to take effect.
“The impetus provided by easier policy is fading before an aggregate spill-over to the smaller, less wealthy, non-coastal cities has been achieved,” noted Mackay.