Residential property prices in China increased in most cities in January according to the new property price index that has been introduced by the country’s National Statistics Bureau.
Prices fell in two cities and remained unchanged in five but 10 cities saw price increases of 10% or more despite renewed efforts to cool the overheated market. The biggest increases were in smaller cities.
Prices for newly built housing increased 6.8% in Beijing compared with a year earlier, while prices rose 1.5% in Shanghai. The largest increases were seen in provincial cities like southern Hainan Island's Haikou and Sanya, where they surged 21.6% and 19.1% respectively. Further north, prices jumped 12.3% in central China's Ganzhou and 14.2% in Yueyang.
The change in the way the figures are complied has raised eyebrows given its timing, since the trend of increases has remained stubbornly high despite various moves to discourage speculative property investments, including higher required down payments and limits on some types of purchases.
Shanghai and the southwestern city of Chongqing recently imposed taxes on property purchases, raising costs for new buyers. This week, Beijing announced it will limit the number of homes each family can buy, prohibiting new home purchases by Beijing families who already own two or more apartments and by non-permanent residents to have at least one apartment.
But such moves do nothing to alleviate the lack of good investment options for Chinese families looking for higher returns on their savings than what they can get from bank deposits.
In cities like Beijing, prices have shot up to more than 20,000 yuan ($3,000) per square meter, putting new homes out of the reach of many ordinary families, despite strong growth in personal incomes.
China's economic statistics have improved in recent years but still are viewed with scepticism by many experts. The government also announced this week a recalibration of its inflation figures to better reflect consumer buying patterns, it says.
Property prices previously were calculated using a national average drawn from a survey of property developers. The new figures do not include a monthly national average price measure, but measure changes in prices based on data from government data registries.
With property buying in the biggest cities subject to various limits, some Chinese are looking to provincial growth centres for investment, pushing prices higher in places like Yueyang, a city on scenic Dongting Lake in Hunan province, and Ganzhou, a city in southern Jiangxi province that has become a magnet for manufacturers looking to cut costs by moving north from the export processing zones in Guangdong province near Hong Kong.
By summarizing broader trends while providing more details of data for specific cities and specific types of housing, the government may manage to provide a clearer picture of how the market is evolving, said James MacDonald, head of research for Savills China in Shanghai.
‘It isn't that the previously reported figures were accurate and the government decided to change them to mislead people,’...