Buyers crowd a home sales center in Hangzhou City, the capital of East China's Zhejiang Province. More than 2,000 buyers competed to buy 388 newly-listed houses. Several cities in China have seen the market for new housing rebound after the Lunar New Year holiday. (Photo/CFP)
Feverish home prices in top-tier Chinese cities are new signs of improvement in the housing market, but may not indicate a full recovery in the sector.
While home prices in metropolises such as Beijing, Shenzhen and Shanghai shot up, markets in small cities remained subdued due to excess stock, which the government has aimed to reduce, but with little success so far.
The housing price index for China's first-tier cities surged 24 percent year on year in January, the latest data from property service provider Savills showed.
However, second- and third-tier cities saw their price indices almost unchanged, while fourth- and fifth-tier cities continued to post drops.
Official data drew a similar picture. In January, new home prices in the southern Chinese economic hub of Shenzhen soared 52.7 percent year on year, according to the National Bureau of Statistics (NBS). Prices in Shanghai jumped 21.4 percent and those in Beijing rose 11.3 percent.
But of the 70 monitored cities, 45 still had new home prices below the levels reported a year earlier.
Analysts attributed the top-tier market revival to government easing efforts, higher expectations for price rises, as well as speculative and investment demand.
Lower borrowing costs, plus plenty of latent demand, are the primary reason for the upturn in first-tier cities, where better-paid jobs bring population inflow, said Li Yujia, an analyst with the Shenzhen Real Estate Research Center.
Earlier this month, taxes on some property transactions were slashed and further reductions to the minimum down payments for first- and second-time home buyers were announced.
