China’s housing inflation accelerated to its fastest pace in April in two years, driven by a jump in prices in Beijing and Shanghai, complicating the task of policymakers trying to cool the property sector while supporting economic expansion.
Average new home prices rose 4.9% last month from a year ago, after a year-on-year increase of 3.6% in March, according to Reuters calculations from data released by the National Bureau of Statistics(NBS) on Saturday.
The rise was the sharpest since April 2011.
Rising home prices have reignited concerns about property inflation, adding to pressure on policymakers who are struggling to curb house prices and still spur a strong economic recovery.
“The market expectations on rising home prices have not changed thoroughly and the property tightening campaign is still at a critical stage to strictly enforce (curbing measures),” Liu Jianwei, a senior statistician at the NBS, said in a statement.
Worried about a rebound in home prices, China’s government unveiled a fresh round of measures in March to try to cool the sector, though those measures were less stringent than market expectations.
New home prices in Beijing rose 10.3% in April from a year earlier and Shanghai’s prices were up 8.5% in April from a year ago. Both marked the fastest year-on-year gains since January 2011 when NBS changed the way it calculated data.
China’s fight against property speculation has headed into its third year but many middle-class Chinese are still priced out of the urban housing market.
However, on a monthly basis, new home prices rose 1 percent in April, easing from March’s gain of 1.2%, the NBS data showed, providing tentative signs that recent government moves to ward off property bubbles are biting.
Home prices rose month-on-month in 67 of 70 major cities monitored by the NBS in April, down from 68 in March.
The accelerating year-on-year home price gains were mainly caused by low bases last year as over 60 percent of 70 cities saw month-on-month price drops last April, said Liu.
China’s home prices began their latest climb in mid-2012 when the central bank started expanding monetary easing as part of Beijing’s growth-supporting policies.
“Going forward, we expect property sector policy to stabilize in the coming months and see a modest property recovery to continue,” Tao Wang, an economist at UBS, said in a note to clients before the data was released.
“Meanwhile, the recent property tightening, including administrative price controls, may keep property prices from rising too rapidly in a few large cities,” Wang added.
Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, only giving home price changes in each of 70 major cities.