By Yawen Chen and Ryan Woo
BEIJING (Reuters) - China's new home prices rose for their 35th consecutive month in March, with more cities reporting growth as the government supported demand from first-time buyers and despite persistent curbs to dampen speculative demand.
Average new home prices in China's 70 major cities rose 0.4 percent in March from the previous month, up from 0.2 percent growth in February, Reuters calculated from National Bureau of Statistics (NBS) data published on Wednesday.
On a yearly basis, new home prices increased 4.9 percent in March, slowing from February's 5.2 percent increase, partly due to a high base effect as policymakers rushed to impose a flurry of fresh tightening measures in late March last year.
The majority of the 70 cities surveyed by the NBS still reported monthly price increases for new homes. Fifty-five cities reported higher prices in March, up from February's 44.
"Today's data shows there is still significant upwards price pressure," Yan Yujin, an analyst with Shanghai-based E-house China R&D Institute said. "It it possible some cities will release more tightening measures."
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China's property market has soared since 2016, giving a major boost to the economy but also raising concerns about bubbles. Prices have slowly levelled off and even softened in tier-1 cities following government measures to rein in speculative investment.
While more than 100 cities have introduced some measures to cool home prices, analysts still expect moderate price appreciation in the country's vast number of smaller centres where regulations are less restrictive.
Price gains reported by smaller provincial capitals expanded by 0.3 percentage points in March from that in February. Haikou, a port city and the capital of China's island province Hainan, became the top price performer in March, risng 2.1 percent on-month.
Meanwhile, prices in top-tier cities also increased 0.1 percent in March from February, reversing a fall in the previous month, the NBS said in a statement along with the data.
Ouyang Jie, vice-president of Shanghai-listed Future Land, said developers have been rushing to roll out new projects in the hope of accelerating sales and securing funding, especially in smaller cities where inventories are falling rapidly.
"More high-end projects were released into the market in March as some were delayed by authorities in the beginning of the year when the National Congress was underway," said Joe Zhou, head of research for JLL China, a property services firm.
"Developers also have more pricing rights in smaller cities for now because they had a really good sales year in 2017 in those markets."
But Zhou also warned of the risks of a moderate price correction later this year with demand frontloaded in smaller cities and signs of softening as more supply becomes available.
China posted its fastest property investment in three years in the first quarter, driven by a surge in land values and as developers grew more confident about the policy outlook.
New home prices on average for the country are expected to rise faster than previously thought in 2018 on falling inventories and still robust demand from smaller cities, according to a Reuters poll last month.
New household loans, mainly mortgages, totalled 580 billion yuan in March. They made up 52 percent of total new yuan loans, versus 33 percent in February.
Chinese property developers are reporting firm results so far. Last week, China's second-largest property developer Vanke reported total contract sales of 154.26 billion yuan in the first quarter, up from 150.3 billion made in the same period last year.
Higher borrowing costs pose a risk for the sector as they will potentially dampen demand, although mortgage rates remain low compared with historic levels, analysts say.
(Reporting by Yawen Chen and Ryan Woo; Additional Reporting by Zhang Min; Editing by Sam Holmes)
Disclaimer: No Business Standard Journalist was involved in creation of this content
