Prices for new homes have risen in China at the fastest pace ever in five months. It happened in May and it has--so far--made it difficult for the government to keep down through stimulus. According to Reuters, China is still in the process of enacting more policies, including the introduction of a stimulus for the slowing economy, to control the pricing growth.
Average home prices in the 'new' bracket rose up 0.7% in May. This is in China's 70 major cities and the amount is that much higher from the previous month.
In April, home prices posted a 0.6% growth. That was the previous high, the quickest pace of growth since December, according to analysis from the National Bureau of Statistics.
It was also the 49th straight month that the Chinese housing market posted highs in price gains. Of the 70 cities surveyed by the NBS, 67 reported having higher prices in May.
Home prices also increased by 10.7% in May and on an annual basis, which has not changed from April's rate of growth, observed by government and market analysts.
The problem has seeped even into the housing in Hong Kong. The Chinese territory has its own problems, but those have compounded the pricing in an already expensive market. SCMP reported that Hong Kong's current situation weighed heavily on the luxury housing market, nearly making prices rise to an almost unbelievable rate.
Secondary home prices, meanwhile, have managed to rebound this year, following a short period of correction during the second half of 2018. The Centa-City Leading index displayed a rise of around 8.6 percent, which had been its highest level ever near the end of May. Prices in that market, however, faced a decline near June 9.
The key to property market stability lies in the local government of the Chinese territory. Currently, the governance is "under scrutiny;" any surge towards the current situation will lead to a dampened sentiment in the property market.
The bigger problem, though, is whether this is only a natural reaction to Chinese prices going higher, or if the territory's allure as a "top financial center" is waning.
China has announced about 41 measures intended to regulate price hikes at the city level. The problem might be that prices need to stabilize first before any other policies, and that is already dependent on how global markets will end up after a 'price boom' levels out.
