The resilience of home sales in China (up 18% y/y in June) has raised questions about the effectiveness of government efforts to cool the sector, which have been stepped up in recent months. In fact, they seem to have been performing well. The major controls are curbs on purchases in large (tier 1 and 2) cities, and sales in these places have started to fall. But officials have been more relaxed about purchases in smaller (tier 3 and 4) cities since this is where much of the overhang of unsold property can be found. It is sales in these places that are driving the headline figures. (See Chart.) Still, the recent rate of sales growth is unsustainable and, with mortgage lending now slowing, it is likely to drop back soon.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services