BOFIT Weekly Review 2016/06
Chinese apartment prices continue to rise
Based on private real estate portal SouFun’s tracking of average apartment prices in 99 Chinese cities, the price of square meter rose by more than 4 % y-o-y in January. The average apartment price has risen from last spring and currently stands at 11,030 yuan per square metre of floorspace ($1,670/m2).
In January, SouFun tracking found apartment prices still falling from a previous month in 36 of its cities, while the figure was over 70 cities in late 2014. The price development is uneven even within provinces. For example, January housing prices were down slightly in Guangzhou, but up significantly on-year in Shenzhen. The price of a square meter of apartment floorspace was up 15 % y-o-y in Shanghai and 8 % in Beijing. In certain cities, prices were down 10 % y-o-y.
The overall situation for real estate construction remains problematic. The volume of new construction starts measured in floorspace is still showing a distinct downward trend, and the situation is unlikely to be resolved quickly as the stock of unsold apartments continues to rise. Besides heavily indebted construction firms, local governments are also struggling. The biggest buyers of land rights are building companies and land right sales of local governments last year were down nearly a third from 2014.
Growth in volume of new apartment building construction
Sources: Macrobond and BOFIT.