Home sales surge 23pct defying curbs

China home sales remained resilient in the first two months of the year, signaling policy makers are struggling to check the booming housing market.

The value of new homes sold rose 23 percent to 912 billion yuan (USD132 billion) in January and February compared with the first two months of 2016, according to National Bureau of Statistics data released yesterday. Sales rose 17 percent in December, the last time the data was released.

“Sales were a lot stronger than expected,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “Buyers in third- and fourth-tier cities chased gains, eyeing similar price surges in top cities.”

The surge comes after top policy makers used this month’s National People’s Congress to reiterate a pledge to curb property speculation, and some local governments expanded home-buying restrictions. New banking regulator Guo Shuqing has said he will pay close attention to real estate bubbles, after 45 percent of new loans in China last year went to the property sector, with most going to personal mortgages.

Most first- and second-tier cities have imposed home-buying restrictions in the past six months.

Buyers turned more bullish, as sales growth by area surged 24 percent year-on-year, more than double the 10 percent increase in December, according to Bloomberg calculations based on the data. Builders remained optimistic with the value of land bought rising 13 percent, the data show.

Investment in real estate development gained 8.9 percent in January-February from a year earlier, down from 11.1 percent in December, according to Bloomberg calculations. Strong property investment helped China’s fixed-asset investment accelerate, rising 8.9 percent in the first two months of the year, compared with 8.1 percent in 2016.

“Previous property cooling measures have helped little to cap property investment,” Betty Wang, an economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, wrote in a note after the data was released.

The inventory of unsold homes rose for the first time since March last year, climbing to 407 million square meters.

Price-controls in cities where home values have risen rapidly will remain tight, or even escalate this year, Moody’s Investors Service analyst Chris Wong wrote in a note yesterday.

“While the effects of increasing land supply will take time to realize, Moody’s believes governments in first- and major second-tier cities will maintain or even tighten their restrictive measures to curb investment or speculative demand for properties, and to prevent an overheating of prices,” Wong said. Bloomberg