(Yicai) Dec. 2 -- Prices of second-hand houses declined in China’s 100 first- to fourth-tier cities in November, mainly because of the large supply and weak expectations. Meanwhile, prices of new homes increased, as new high-end projects hit the market.

The average price per square meter for second-hand homes in China’s largest 100 cities was CNY13,143 (USD1,858) in November, down nearly 8 percent from a year earlier and 0.9 percent from the previous month, according to a report published yesterday by the China Index Academy, based on the China Residential House Price Index (HPI-100).

In first-tier cities, pre-owned home prices experienced the biggest drop last month, down 1.2 percent from October and 5.6 percent from the same period last year, per CIA data. The declines in second-tier cities were 1 percent and 8.2 percent, respectively, and those in third- and fourth-tier cities were 0.8 percent and 7.5 percent.

However, the transaction volume of second-hand houses increased last month, reaching 17.04 million sqm in the top 30 Chinese cities, up 14 percent from the previous month, according to data from China Real Estate Information Corporation. The transaction volume in first-tier cities and second-tier cities surged 10 percent and 13 percent, respectively, month-over-month in November.

The average price per sqm for newly built houses in China’s top 100 cities was CNY17,036 in November, up 0.4 percent from October and 2.7 percent from the same period last year, according to CIA data. High-end housing projects entered the market in cities such as Shanghai, Chengdu, Hangzhou, and Ningbo last month, driving up the prices of new houses in first- and second-tier cities.

Prices of new homes in first-tier cities rose 0.8 percent from the previous month and 6.7 percent from a year earlier in November. Those in second-tier cities jumped 0.4 percent and 1.9 percent, respectively, and those in third- and fourth-tier cities fell 0.2 percent and 1.6 percent.

With the release of the Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development, urban renewal projects will become the real estate industry’s new core growth engine, the CIA predicted.

Chongqing, Hubei province, and other local governments have recently issued nearly CNY35 billion (USD5 billion) special bonds to recover and acquire idle land, with related supporting financial and tax policies being implemented.

The CIA believed that real estate developers will enter a stage of sales sprint this month, with an increase in the supply of high-quality new properties in core cities, likely creating a carry-over effect on the transaction volume of new houses.

The second-hand housing market remains in a period of price fluctuations due to the high number of listed houses. However, the transaction volume is expected to remain stable by the end of the year thanks to the support of policies.

The China Residential House Price Index (HPI-100) was initiated by the Development Research Center of the State Council, China Real Estate Development, and others in 2010. It tracks home prices in China’s top 100 cities and is published every month.

Editor: Futura Costaglione