Chinese home prices began to pick up from one-year lows starting in February and home buying volumes reached a record high in recent months. Evidently, some buyers believed that prices had hit bottom at the start of the year.
Figures from the National Bureau of Statistics (NBS) showed that prices of new and existing homes in 70 large and mid-sized Chinese cities including Beijing, Shanghai and others fell 0.6% year on year in May, but prices still edged up 0.6% from April.
This was the third consecutive month that home prices had climbed month on month.
Chen Sheng, vice president of the China Index Academy (CIA), a private-sector research institute that specializes in real estate, said that the signs of life in the residential property market largely reflected government stimulus policies for the sector and consumers’ inflation expectations following a loan spike early this year.
Of the total RMB187.6 billion of consumer bank credit in May, RMB100.8 billion was aimed at long-term housing loans, accounting for 53.73% of the total.
Qin Rui, a senior analyst with 5i5j, said that some homebuyers were ‘following the crowd’ when buying apartments in February, March and April this year as they did in the property buying spree of 2007 when the market was strong.
China View noted that investors accounted for 13.88% and those who were trading up accounted for 34.42% of the total. 14.49% were those who bought second-hand homes for their elderly parents or so that their children could live closer to school.