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China house prices rebound — how come?

  • Author:naky
  • Source:www.diecastingpartsupplier.com
  • Release on:2015-09-23
Data published on Friday by China’s National Bureau of Statistics have shown a further rise in home prices in the country.

The recovery has taken the market by surprise, after many predicted last year that China’s housing market was on an irreversible downward trend.
What is going on?
One often-cited reason for the rebound is that investors are switching from equities to housing as China’s stock market bubble deflates.

But there is little evidence of this.
Seventeen per cent of consumers surveyed by FT Confidential Research in August said they planned to invest in real estate in coming months, still well below the 41 per cent planning to buy stocks.

Only 20 per cent of consumers in August thought that now was a good time to buy a house for investment purposes.
Some observers say the uptick in home prices is happening only in larger Chinese cities. But while it is certainly true that first-tier cities have led the upturn, there are indisputable signs of recovery in smaller cities as well.

Outside of provincial capitals and municipalities, the average price of residential floor space sold has risen 2 per cent year on year so far in 2015, according to the NBS.
Analysis from FT Confidential Research suggests that the main factor is an undersupplied housing market: demand is recovering at a faster pace than supply is being increased.

Another indication is that housing inventories are now being rapidly drawn down.
Residential floor space available for sale — including units being sold off-plan — fell to the equivalent of 10.3 months of sales in August in the 10 cities tracked by FT Confidential Research, the lowest level since March 2014.