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Chinese Housing Market Recovers from 2014 Slump

| Jan 05, 2016 11:27 PM EST

The price slump in 2014 continued until the first four months of 2015. It was only in May 2015 when national prices experienced a slow turnaround due to the implementation of several policies.

After experiencing a slump in 2014, China’s real estate market has recovered by rising up to 4.15 percent in sales prices last year, according to the China Index Academy, a private research institution.

This was only in major cities, however, as smaller areas experienced declines in sales prices, reported China Daily.

These losses were offset by the strong gains in China's larger cities, where home prices increased.

Average home prices in first-tier cities increased by 17.2 percent, a surge that was driven by Shenzhen, Guangdong Province, where home prices rose by 38.7 percent to 42,591 yuan or $6,540 per square meter. The increase was fueled by speculation, the demand for land and the growing wealthy population in the area.

Meanwhile, home prices in Shanghai rose by 15.3 percent to 36,935 yuan per square meter.

Beijing experienced a more tolerable increase, as average prices increased by 9.2 percent to 34,981 yuan per square meter.

China's second-tier cities experienced a more varied situation, however. Although home prices declined by 0.53 percent, the case was varied among cities.

For example, home prices in Wuhan, Hubei Province, increased by 15 percent, making it the highest among the second-tier cities. Fuzhou, Fujian Province, on the other hand, saw a decrease of 11 percent in home prices.

It was an all-time low for third- and fourth-tier cities as most home prices in these areas fell. As a group, sales prices in third-tier cities fell by 1.1 percent.

The price slump in 2014 continued until the first four months of 2015. It was only in May 2015 when national prices experienced a slow turnaround due to the implementation of several policies. By August, the month-on-month growth grew up to 0.96 percent.

Experts are optimistic that home prices in 2016 will continue to rise due to more stimulus measures.

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