After a brief slowdown in the first half last year, sales jumped 53% in March from a year ago, government data released Monday show.
Prices for new homes climbed the most in more than two years from February, according to SouFun Holdings Ltd., owner of the country's biggest real estate website.
The average home price on the mainland is forecast to increase to 10,224 yuan (HK$12,550) per square meter by 2025, up 105.16 per cent compared to the price in 2011, according to Jefferies Hong Kong. The average home price in 2011 was 4,993 yuan per sq. meter. From 2013 to 2025 the national housing price is expected to grow slightly below GDP at 5% compound annual growth rate, capped by government tightening measures.
Average selling prices in second-tier cities are forecast to grow 10 pecent, while the rest of the country will see rises of five to 10 per cent. All real estate markets are local, says the industry axiom, one that China's central government is painfully aware of as its efforts to rein in home prices are undermined by uncooperative municipal authorities.
Local officials lack the resolve to cool the market because proceeds from land sales contribute about a quarter of their fiscal income and are needed to fund infrastructure and other spending. Their reluctance to act decisively poses a challenge to Premier Li Keqiang, who replaced Wen on March 15 and inherited rising prices that aggravate social unrest by putting homes out of the reach of many Chinese.
Spurred by China's dizzying economic growth and runaway real estate prices at home, cashed-up Chinese are now snapping up investment properties in other parts of the world. The latest forecasts show that China's outbound real estate investments could climb to a new high of five billion US dollars this year.
Housing prices rose in 68 of 70 Chinese cities in April when compared to the previous month, according to the National Bureau of Statistics. Compared to last year, prices were higher in all but two of the 70 cities tracked by the government. Prices in the capital, Beijing, registered one of the largest increases, rising 10.3% over the previous year. In the southern manufacturing hub of Shenzhen, prices jumped 11.3%. On average, new home prices across the cities increased 4.3% over the previous year.
Fearing the development of a real estate bubble, China has sought to stem rising property prices in recent months. But policymakers have also been forced to consider the broader impact of such policies as China's economy shows signs of slower economic growth.
Citing rampant speculation and poor planning, some China analysts are worried about the development and possible deflation of a housing bubble. Chinese citizens have limited investment options, and real estate is a popular choice for those looking to expand their portfolio. Yet other analysts insist that fears of a bubble are overstated. Hundreds of millions of Chinese are expected to move from rural areas to cities over the next decade, they say, and demand is likely to remain strong.
