Property prices in China are rising relentlessly, according to new government data, and not even strict property controls have been able to stop them.
Average house prices in 70 Chinese cities climbed 4.3 percent in April from a year ago, based on calculations from the Wall Street Journal, or 4.9 percent according to Reuters, which would be the fastest pace since April 2011.
High demand fuelled by easily available credit has pushed prices up, making it harder for first-time buyers to get on the housing ladder and raising concerns that a property bubble is developing. In mid-2012, China’s central bank cut interest rates in an attempt to reverse a slowdown in the economy, but the knock-on effect on housing has been hard to control—not that the government hasn’t tried.
In February the State Council said it would ask cities with rapidly rising prices to implement restrictions on the housing market, particularly in places where prices are being pushed up by property investors. In March Beijing and Shanghai took up the call (paywall), declaring that unmarried individuals would only be allowed to purchase one residence. Beijing also announced that deposits on second homes would be higher, and capital gains tax for selling a second home would rise. Both cities also said they would build thousands of new affordable apartments. But despite all this, prices in Beijing rose 10.3 percent in April from a year earlier and in Shanghai were up 8.5 percent.
Liu Jianwei, from the Chinese National Bureau of Statistics, said the controls were still at an early stage and would need time to work. But he admitted that “expectations of [further] home price increases haven’t been fundamentally eliminated.” Translation: more price rises are looking likely.
This post originally appeared on Quartz, an Atlantic partner site.