A recent report published by the Shanghai E-House Real Estate Research Institute shows the housing market craze in China has passed to Tier 2 or 3 cities from major Tier 1 cities, the 21st Century Business Herald reported.
Hefei, the capital city of Anhui province in east China, has led the way in surging housing prices, with an accumulative growth of 52% at the end of August, followed by Beijing and Guangzhou, which have seen a rise of 51% and 47% respectively.
In 2015, Shenzhen, Beijing, Shanghai and Guangzhou, the four big cities in China, dominated growth in housing prices.
After the crackdown on the housing market in early 2016, when home prices in Tier 1 cities faced curbs, Tier 2 cities, including Hefei, Xiamen, Wuxi, Zhengzhou, and Nanjing took turns leading soaring home prices with double digit growth.
The report compares the phenomena to “sector rotation” in the stock market. Based on this theory, sectors which see the earliest and largest growth, will inevitably be the first to go down. Thus, the home prices in Tier 1, 2 and 3 cities are expected to decrease successively.