New home prices jumped 10% in May
In May, prices of new home in major Chinese cities rose 10% year on year. Attractive loan interest rates can explain this sharp increase.
According to the consulting firm China Index Academy, the average price of a new home in the 100 largest cities in China surged 10.3% to reach 11,600 yuan per square meter in May. The property market recovery is especially significant in second-tier cities like Xiamen, Hefei and Nanjing with a 5% increase in average. The performance is also remarkable in Shanghai and Beijing with a respective increase of 1.9% and 1.8% in property prices.
According to the Chinese government, the number of transactions was up 37% over the same period. Analysts explain this situation by the low-interest rate loans imposed by Beijing to boost the real estate sector. In February, the Chinese central bank had lowered from 25 to 20% the minimum level of contribution for obtaining a loan for first home buyers.