A further acceleration in home prices on the official survey of 70 cities has sparked hopes that China’s residential property market may be heating up after more than a year of nearly flat sales. But we are less optimistic. Our own calculation of developers’ implied sales prices shows turning points much earlier. On this measure, property price growth has been slowing in recent months. A wholesale relaxation of property controls would help to reverse this trend, but policymakers remain reluctant to embrace such a move until prices gains have been brought further under control.
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