Business

China's sizzling property market gets hotter

BEIJING: Prices in China's sizzling property market, a major driver of growth in the world's second largest economy, accelerated last month on a monthly basis, shaking off the impact of recent cooling measures introduced to dampen speculative demand.

Average new home prices in China's 70 major cities rose 0.6 per cent in March from February, higher than the previous month's reading of 0.3 per cent, according to Reuters calculations based on an official survey yesterday.

The National Bureau of statistics, which published the report, said yesterday while prices in 15 major cities appeared to be "stable" on-month, price growth for new homes in smaller third-tier cities quickened 0.4 percentage points.

Economists say more tightening measures are likely as price momentum builds, but with price gains and sales in top-tier cities appearing to be peaking, future curbs are likely to be more targeted.

"I think the tightening focus will shift to more medium- and small-sized cities in the future because sales have fallen quite significantly in first-tier cities," said emerging markets economist Zhou Hao, from Commerzbank AG in Singapore.

Compared with a year ago, new home prices in 70 cities rose 11.3 per cent, slowing from February's 11.8 per cent gain.

Yesterday's data also showed prices gained momentum in the resale market, which is seen as more indicative of actual demand as it is not subject to the kinds of price caps widely applied to new projects. Price growth in the residential resale market quickened to 0.8 per cent month-on-month in March from 0.4 per cent in February, a Reuters calculation showed.

Sharper price gains highlight the challenge authorities face in taming an overheating market without bursting a speculative property bubble. - REUTERS

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