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Even smaller Chinese cities are prey to speculative home price hikes

Also, Beijing imposes harshest property curbs yet

Shijiazhuang, a city southwest of Beijing, was one of several hot Chinese markets that imposed property curbs this month. Yuangeng Zhang/Shutterstock[/caption]

New home prices continue their upward streak not just in mainland China’s biggest metropolises but also in its smaller, satellite cities.

The number of cities that registered new home price increases tallied at 56 in February, compared with 45 in January, according to new figures released Saturday by the National Bureau of Statistics (NBS).

New home prices in China inched 0.3 percent up month-on-month in February, compared with a monthly rise of 0.2 percent in January. Yearly growth for home prices reached 11.8 percent in February.

Home prices in Hefei, capital city of eastern Anhui province, rose 40.5 percent year-on-year, the fastest-growing market among 70 cities tracked by NBS.

More: China was the largest outbound property investor of 2016

In Shijiazhuang, capital of Hebei, a province adjacent to Beijing, values soared 18.2 percent year-on-year and 0.2 percent month-on-month in February. On Saturday, the city levied property curbs for the first time since 2014.

The minimum down payment ratio for local residents purchasing second homes in Shijiazhuang is now set at 40 percent. Non-local residents will not be allowed to buy more than one residential property in the city of 10 million people.

All in all, seven cities escalated their property investment restrictions in a span of 19 days this month.

Beijing unleashed its most onerous cooling measure Friday. The government raised the minimum down payment threshold for second home purchases to 60 percent, up from 50 percent earlier. “Non-ordinary home” buyers will be compelled to fork out at least 80 percent of a property's value for down payment, up from 70 per cent.

"We should better regulate housing development, marketing and intermediary services, and keep home prices from rising too quickly in popular cities," said Premier Li Keqiang at the annual session of the national legislature earlier this month.

Read next: China still has more billionaires than the US


Why Brisbane is hot property at the moment

A little less cosmopolitan, a little less youthful than its southern neighbours but 'Brissy' is far sunnier and growing hotter as an investment destination

Streets Beach, a manmade beach in Brisbane's inner city. Martin Valigursky/Shutterstock[/caption]

Last week, Brisbane set a record in residential property with the sale of a Kangaroo Point mansion for AUD18.48 million (USD14.28 million). The transaction surpasses the 2014 sale of an Aaron Avenue home to Gina Rinehart, the richest person in Australia, for AUD14 million.

The high-end Brisbane residential market has indeed seen a positive shift toward the end of last year, according to Ray White New Farm, which brokered the latter sale. Indeed, Brisbane registered a record number of transactions in homes above the AUD5-million threshold in 2016.

Asians in particular are waxing zealous for Brisbane, the third most searched state capital in Australia on Chinese property portal showed. Demand for Brisbane homes from international investors stem the most from China, followed by the United States, New Zealand and England, according to the Real Estate Institute of Queensland (REIQ).

“We see the gap between Sydney and Melbourne closing in the next couple of years," said Patrick Hunt, manager at local property titan Indigo Building Group. The northern migration from an investment point of view continues."

Brisbane enjoys far less volatility than Gold Coast, Queensland's other large metropolis. “Gold Coast tends to suffer from a boom-bust cycle more so than Brisbane,” Hunt added.

[caption id="attachment_61932" align="aligncenter" width="1000"] Winter Festival in Brisbane's King George Square. Martin Valigursky/Shutterstock[/caption]

Next to the frothy markets in New South Wales and Victoria, Brisbane's affordability has resonated with offshore investors. For perspective, the median house price in Sydney stands at AUD867,000, while that of Brisbane is AUD635,000, per REIQ data.

“People can't afford the yield that they're looking for in other cities; their returns aren't there,” said Mitch Koper, media manager at property analytics firm “In Brisbane, you can buy a house for AUD600,000 and get a return of 7 or 8 percent in some cases. It's a very reasonably priced market.”

For all its lure, however, Brisbane has posed challenges to enthusiasm among international investors of late. In June, the Queensland government levied a 3 percent surcharge on foreign purchases.

More: Are Asian home buyers facing racist backlash in Australia?

Then there are more inherent challenges. Although it boasts more sunny days than the more ephemeral climes of its southern neighbours, ‘Brissy' still somehow lacks the sophistication of the south. “I moved to Sydney because Brisbane is so laidback,” said Mark Mitchell, a Filipino-Australian systems analyst. “Brisbane is a place to retire, a good place if you are old, although it does have a man-made beach in the City at Southbank.”

“What I hate about Brisbane is that it’s too small. Everyone knows each other, a bit racist,” said Angie, a Vietnamese makeup artist who married to a Greek in Brisbane. “Clubs ain’t that great, and there are not that many events like in Melbourne.

“Also, sh*t coffees.”

Read next: Has Australia had enough of Asian buyers?


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