Shanghai leads China’s property market recovery

September 29, 2016

China’s property market recovery is being led by Shanghai, followed by Shenzhen, Beijing and Guangzhou.

Shanghai led the real estate market recovery in China as it topped the ranking in the country for real estate development and investment prospects, revealed an Urban Land Institute (ULI) report.

Named “the only city in the Chinese mainland with liquidity for foreign investors”, Shanghai posted an average home price hike of more than 33 percent during the 12-month period ended June 2016.

The report noted that second-placed Shenzen was the hottest real estate market in the Chinese mainland in the past year, as average new home prices there rose 47 percent between June 2015 and June 2016.

Beijing, which is one of the most preferred markets by institutional investors despite the limited investment opportunities, came in third, with average home prices increasing 22 percent since June 2015.

In fourth place was Guangzhou, which registered the slowest rent and property increase, as average new home prices there increased by just under 20 percent in June 2016. The city has been a challenging place for outside developers and investors, as the local market is dominated by local developers who are generally considered well-financed and capable.

ULI noted that the real estate market in China made a strong recovery in the past year due to the government’s loose monetary policy, as well as favourable policies for the housing market, such as the cancellation of home purchase restrictions nationwide.

The housing sector recovery saw new home prices climb 8.9 percent on average across the Tier 1 to Tier 3 cities during the 12-month period ending June 2016.

“Expansionary monetary policy as well as policies on home-purchase restrictions and down payment ratios clearly contributed to the housing market turnaround,” said Kenneth Rhee, ULI Chief Representative for the Chinese Mainland and author of the report.

“With the government already imposing restrictive policies to dial back the residential market, how the government further reacts will greatly affect the housing sector.”

 

Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg

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