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Chinese house prices accelerate again, defying attempts to curb building bubble risks

Photo by China Photos/Getty Images

Chinese home prices are accelerating again, creating a headache for policymakers who have rolled out a steady stream of measures designed to cool housing market activity.

According to data released by China’s National Bureau of Statistics (NBS) earlier today, new home prices rose by 0.6% in March, double the 0.3% increase of February.

Of the major cities, the NBS said that prices rose by 0.4% in Beijing, marking the first increase reported since October last year.

Elsewhere prices rose by 2.5% in Guangzhou, 1.1% in Chongquing and 0.2% in Tianjin.

Those in Shanghai and Shenzhen bucked the trend, falling 0.1% and 0.3% respectively.

Despite the pickup in home prices across the nation in March, the annual increase slowed to 11.3%, according to calculations from Reuters, down from 11.8% in February.

From a year earlier, the NBS said that prices rose by 19% in Beijing and 16.8% in Shanghai, slowing from the 22.1% and 21.1% increases reported in the year to February.

Of the other major centres, prices rose by over 20% in Tianjin and Guangzhou, and by 9.1% and 8.9% in Shenzhen and Chongqing.

All major cities tracked by Reuters recorded a slower annual pace of growth in March aside from Chongqing where they accelerated upon the 8.3% gain reported in February.

Despite the slowdown in annual price growth recorded in March, the month-on-month acceleration will not be welcomed by policymakers who have steadily rolled out measures in many major cities since late 2016 — including in mid-March — to stymie housing market activity.

For the moment there are only limited signs this is succeeding, ensuring that concerns over a potential housing bubble, and with it heightened financial stability risks, continues to increase.

According to data released by the NBS on Monday, Chinese property investment, which includes residential, commercial and office investment, grew by 9.1% year-on-year in the first quarter of 2017, up from 8.9% in the first two months of the year.

Still, despite signs to the contrary, some policymakers remain confident that housing market conditions will eventually slow.

“Because the latest round of cooling measures came out after March 17, their impact on the entire economy including home prices may show in April or later,” said Mao Shengyong, a spokesman from China’s statistics bureau, according to Reuters.

More than 50 Chinese cities have introduced tougher measures to limit price gains since mid-March including hiking deposit requirements, limiting the number of properties that can be purchased by individuals along with setting minimum holding periods before newly purchased properties can be sold.

It also follows moves from the People’s Bank of China, the nation’s central bank, to slow lending activity through higher money market interest rates to contain debt risks and discourage speculation.

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