Fresh data from China's National Bureau of Statistics shows that housing prices in major cities gained ground in December.
39 out of 70 major cities, saw the price of new homes rise above November rates. However, prices in the second and third-tier cities remained flat, with 27 cities seeing a price decline. On a year-on-year basis, home prices rose 7.7 percent in December, versus 6.5 percent in November.
Analysts say favorable policies, such as interest rate and down payment cuts, are helping to buoy the market. Chinese government has advocated speeding up the inventory turnover of the housing sector, and analysts say more policies are expected to come.
The prices of China's first-tier cities have regained power, what do first-tier city residents think of the property prices and what's outlook for the property sector in 2016?
Strong demand in first-tier cities is behind the rebound of property prices. Despite the recent price increase, residents of Beijng believe that property prices in central locations will continue to go up.
But analysts say that China's property market still faces strong headwinds in 2016, especially in the lower-tier cities, due to over supply. They expect transaction volume to shrink slightly due to a miss-match in supply and demand, as well as high base numbers from 2015.
In addition to internal demand, foreign investment into China's property market remains strong. China is the third most popular property investment destination in the Asia Pacific region, behind Japan and Australia, according to CBRE research. Foreign investment is also shifting focus to tier one cities.
Chin adds that government restrictions have supressed demand in first-tier cities. Hence, there is a lot of room for policy loosening to increase demand. The volitile equity markets in China and limited investment options give investors no better choice to park their money.
