China’s new home prices grow slightly in May

China’s new home prices grow slightly in May

© Reuters. FILE PHOTO: Apartment blocks are pictured in Beijing, China December 16, 2017. REUTERS/Jason Lee

BEIJING (Reuters) – New home prices in China rose in May at the same pace as in April, official data showed on Thursday, as a raft of government measures to cool the market began to bite.

Average new home prices in 70 major cities grew 0.6% in May, unchanged from April, according to Reuters calculations based on data released by the National Bureau of Statistics.

On a year-on-year basis, new home prices rose 4.9%, slightly faster than a 4.8% rise in April.

Real estate, a vital source of growth for China’s economy, has bounced back quickly from the COVID-19 crisis. But a relentless rise in home prices, particularly in big cities, has raised concerns about overheating.

Chinese property prices have risen quickly this year, even as the government took a series of measures to cool the market, including stricter rules for home buyers, curbing loans to developers and guiding banks to increase mortgage rates.

The NBS data showed 62 cities reported monthly gains in May, with the number unchanged from the tally in April.

New home prices quickened slightly in tier-1 cities, while growth flatlined in tier-2 and 3 cities.

Earlier this week, data showed China’s real estate investment rose in May at its weakest clip this year as policy tightening on developers’ financing and mortgages gradually kicked in, although growth stayed resilient.

China’s home prices are expected to grow 5% this year, according to a Reuters poll of analysts in June, up from a forecast for a 3.3% gain in a similar survey in February.

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