Pace slows but house prices keep on rising

House prices rallied for another month in April but at a slightly slower pace.

The average price of new residential properties across 100 major Chinese cities rose 1 percent from March to 10,098 yuan (US$1,628) per square meter, the 11th straight month prices have risen, the China Index Academy said yesterday. March's increase was 1.06 percent.

Forty of the 76 cities that posted gains saw increases above 1 percent. In March, 84 cities recorded month-on-month growth, with 51 registering a rise of more than 1 percent.

Hengshui in Hebei Province led last month's gainers with a 3.7 percent rise.

Twenty-four cities saw prices drop, with five retreating more than 1 percent. Jilin in Jilin Province had the biggest drop, 2.09 percent.

"With a notable retreat in sentiment amid an overall tightening environment across the country, purchases of both new and existing houses fell significantly from their March high in major Chinese cities," the academy said.

"However, in first-tier cities and a couple of second-tier ones as well, home prices will likely go up further due to rather tight new home supply."

In the country's 10 largest cities, the average price for a new home rose 1.31 percent to 17,023 yuan per square meter in April, accelerating from March's 1.25 percent growth.

Beijing led with a 3.11 percent monthly gain, immediately followed by Guangzhou's 2.41 percent. Shenzhen and Shanghai saw price gains of 1.94 percent and 0.19 percent, respectively.

In Shanghai, a report by Shanghai Uwin Real Estate Information Services Co found that new home sales had dropped by more than 40 percent compared to March.

Purchases of new properties, excluding government-funded affordable housing, fell 41.3 percent to 902,900 square meters in April, while the average price jumped 4.5 percent from a month earlier to 23,914 yuan per square meter.

On the supply side, nearly 840,000 square meters of new houses were released to the local market last month, compared to 1.33 million square meters in March.

"Sales have outnumbered supply for seven consecutive months in Shanghai, continuously dragging inventory down, particularly in the medium to low-end segment which have been the best-selling products in the market as tightening measures stay in place," said Huang Zhijian, chief analyst with Uwin. If that scenario remains unchanged, it's inevitable prices will rise, Huang said.

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