New home costs increase at a slower pace in Dec

New home prices rose at a slower pace in December, with the four top-tier cities reporting an average price growth of 0.3 percent on a monthly basis.

New home prices rose in 60 of the 70 cities tracked by the National Bureau of Statistics in December from a year earlier. On a monthly basis new home prices rose by 0.1 percent in December and by 3.7 percent on a yearly basis, according to data released by the NBS on Friday.

This is the sixth month in a row that the new home price index sees slowing year-on-year growth. Among the 70 cities the fastest growing city was Yangzhou in Jiangsu province, said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution, adding that all cities saw a price growth of below 1 percent on a monthly basis.

Sheng Guoqing, chief statistician of the NBS, said that major Chinese cities have been closely following the central government's guidelines in building a long-term real estate mechanism. "They have adopted measures in accordance with their own conditions, which serve as a strong support in promoting the healthy and stable development of the property sector," he said.

As for new home prices in the four top-tier cities, Guangzhou rose 0.7 percent on a monthly basis, Beijing and Shanghai followed with 0.3 percent and 0.2 percent, while Shenzhen fell 0.1 percent. Compared to a year ago, the four top-tier cities saw a 3.9 percent growth in new home prices, the same as the previous month, according to the NBS.

In the pre-owned home market, the top-tier cities saw growth rates of 0.6 percent on average. Guangzhou saw the largest month-on-month increase of 0.7 percent in transaction prices among the four, followed by Shanghai with 0.6 percent. Beijing and Shenzhen saw monthly growth rates of 0.5 percent.

Xu Xiaole, chief market analyst with Beike Research Institute, said that fast growth in home prices is a phenomenon that is always seen at the end of the year."The home price rally in first-tier cities also contributed to the higher transaction volumes in these cities," he said.

According to Xu, pre-owned home trade volume in the four cities rose by 20.5 percent in December from a month ago, with the single-month transactions in Guangzhou and Shanghai hitting records since 2019.

Another key reason for the fast growth in used home prices in Beijing, Shanghai, Guangzhou and Shenzhen is the higher school district home transactions in these cities, said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.

Due to COVID-19, a large number of students who used to study abroad have returned to China to continue their education, and their first choice is top-tier cities that are home to a number of high-quality schools and universities, said Zhang.

Some of these homebuyers opted for secondhand homes due to the scarcity of new residential projects in top Chinese cities, and that may also have boosted home prices in these cities, said experts.

In the 31 second-tier cities monitored by the NBS, new and used home prices rose by 0.1 percent on a monthly basis. On a yearly basis new home prices rose by 4 percent and by 2.2 percent for houses traded in the secondary market.