Home Prices: Sharp gains spreading to smaller cities

HONG KONG:  

Sizzling home price rises in China’s biggest cities showed signs of easing in May but sharp gains appeared to be spreading to smaller cities, making policymakers’ job harder as they look to support the faltering economy without inflating bubbles. Average new home prices in 70 major cities climbed 6.9% last month from a year ago; accelerating from April’s 6.2% rise, The National Statistics Bureau (NBS) data showed 50 of the 70 major cities it tracks saw year-on-year price gains, up from 46 in April. “The average (price) growth of new homes in first-tier cities started to narrow, while it continued to widen in second- and third-tier,” said Liu Jianwei, a senior NBS statistician. While the cooling trend in megacities may be good news for policymakers in Beijing, the survey showed sharp price rises are now spreading to other parts of the country. The spillover of higher prices to major second-tier cities is fuelling speculation that local governments there may also tighten restrictions on home purchases soon.

Published in The Express Tribune, June 19^th, 2016.

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