Smaller cities in China led the increases in the country’s home prices last month, as Shanghai, Beijing and other larger metropolitan areas implemented the central government’s local housing measures.
Prices of new homes in the city of Yueyang climbed the most, among 70 cities tracked by the government, increasing 12 percent from last year. Meanwhile, home prices in western cities like Lanzhou surged 11 percent, according to China’s statistics bureau.
According to data, home prices in Beijing rose 6.8 percent, while in Shanghai, they climbed 2.3 percent, lower than 80 percent of the cities tracked.
China has raised the minimum down payment for second-home purchases this year, as the central government focuses on policies aimed at curbing speculation. The city of Chongqing and Shanghai have also implemented taxes on residential properties, while Guangzhou and Beijing introduced restrictions on housing purchases in February.
“Strict property measures in the major cities have driven buyers to smaller cities,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group Ltd. “That raised inflation pressure in those cities.”
On 5 March, Chinese Premier Wen Jiabao said that the country would “resolutely" press ahead with controls to curb speculation in the property market, pledging to keep housing affordable. He added that the government will “severely punish” irregularities in the market and implement tax policies.
Meanwhile, home prices in all but two of the 70 cities rose in February from a year ago, while only nine cities posted declines from the previous month.
“The number of cities that have monthly declines is still not big enough to show the government curbs are working,” said Johnson Hu, a property analyst at CIMB-GK Securities Research Pte. “With the restrictions on purchases in place late last month, it will still take some time for the policy to show effect.”