China’s top-tier cities post continued growth

2016 has been quite the year for China’s property sector. With property booms in top-tier cities such as Beijing, Shanghai and Shenzhen, overall investment in the country’s real estate rose by 6.9% last year.

chinaSince the property sector is one of China’s main sources of economic growth, and her economy did grow by 6.7% last year, fuelling 40 other main business sectors in the country, economists, the China government would no doubt hope for continued success this year. But there have been concerns that the pressure on the property bubble is building up and might be reaching bursting point.

Despite the government’s attempts to cool the market with rapid and frequent policy changes over the past couple of years, property investment growth has hit a 11.1 per cent high last December, up from the 5.7 per cent in the month before. Though home prices in some cities have began to fall slightly, analysts are seeing that market sentiments are hardly sensitive to policy shifts. Should the policies stick, any significant changes will only come with time. As most investors consider property-ownership the most feasible and desirable means of adding to their income, demand in top-tier cities remain high despite soft price growth.

GuosonCentreRecent shifts on the international front however may mean continued growth in the real estate market within China as more investors look inward, what with the Trump administration turning things on its head with his trade agreements changes. It may be in the government’s interest to acquire land revenue while keeping an eye on a burgeoning real estate sector which on the plus side will boost economic growth but may cause bigger issues later on if allowed to continue on its upward trajectory.

No signs of weakening China property market

Shanghai and Shenzhen – both super cities for properties. Home prices in these 2 top-tier cities have not waned despite China’s government tightening rules on the property market.

Savannah Hong KongIn April this year, home prices in Shanghai and Shenzhen continued to rise 2.3 and 3.1 per cent respectively. Though the numbers are slightly lower than March’s 3.7 and 3.6 per cent, in light of economic instability in other countries, this is a good sign. Even within China, where internal restructuring, higher global competition and weakening demand have began to put the brakes on their economy, the property sector continues to enjoy the momentum of growth.

Just over a year, home pieces in Shanghai  have risen a whooping 62.4 per cent and that in Shenzhen have grown 28 per cent. Across 70 cities in China, home prices are now 6.2 per cent higher, a further increase from the 4.9 per cent in March. Besides buying in the mainland, Chinese investors are also buying up properties in various other international cities such as Vancouver, Sydney, Melbourne, Hong Kong; and countries such as New Zealand, Malaysia, Cambodia and Thailand.

Canada HouseEven while property prices in first- and second-tier countries continue to accelerate, third-tier cities are also beginning to post positive growth after a period of declining interest and sales. Policy makers are however concerned about the excessive lending and rising debt levels and may be prompted to tighten lending rules and implement further measures.