BEIJING (Reuters) – Home prices in China’s biggest cities would likely rebound if government curbs are relaxed, a senior official from the country’s top economic planner was quoted as saying, suggesting authorities are in no mood to lift restrictions any time soon.
A flurry of measures to cool soaring prices in the largest cities have produced “clear results”, said Ning Jizhe, vice chairman at National Development and Reform Commission (NDRC), according to the People’s Daily.
But Ning said tier-1 and tier-2 cities are still seeing upward price pressure.
A housing boom has been a key driver of China’s stronger-than-expected economic performance in recent months, but analysts believe it may also pose the single biggest risk to growth this year if tougher curbs spark a price crash.
Over two dozen cities unveiled fresh restrictions on home buyers in March and April to curb speculation, after data suggested earlier measures did little to cool the country’s property fervor.
Average new home prices in China’s 70 major cities rose 0.6 percent in March from February, higher than the previous month’s reading of 0.3 percent, according to Reuters calculations.
Media reports since then have suggested a drop in home sales in some cities after the latest measures, though China watchers are unsure if actual price declines would merely encourage a fresh wave of buying.
Borrowing costs have continued to edge up, data from Rong360.com, a Chinese provider of customized financing and loan services showed.
Mortgage interest rates for first home buyers rose for the fourth straight month in April, up 0.67 percentage points from the previous month to an average 4.52 percent across 35 major cities.
Interest rates for buying a second home averaged 5.39 percent in April, largely in line with the previous month, Rong360 data showed.
Since the start of 2017, banks in China’s major cities such as Beijing have started lowering the discounts on mortgage rates in an effort to contain rapid credit growth in the sector.
(Reporting by Yawen Chen and Kevin Yao; Editing by Kim Coghill)