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China house price growth tops global rankings, 40pc gain in some cities



The skyline at Shenzen in China, where house prices have risen 35 per cent. 
The skyline at Shenzen in China, where house prices have risen 35 per cent. iStock

The surging housing markets of Sydney and Melbourne pale in comparison to the boom in China that has pushed prices up by 40 per cent in some major cities.

Chinese cities account for the top eight rankings in Global Residential Cities Index compiled by international real estate group Knight Frank.

Nanjing topped the chart, posting price growth of almost 43 per cent in the 12 months to the third quarter of 2016.

Shanghai was not far behind with growth near 40 per cent, followed by the technology hub of Shenzhen of 35 per cent. Prices surged more than 30 per cent in the capital, Beijing.

China's policymakers have moved to cool the market in recent months lifting downpayment requirements and limiting the amount of houses non-residents can own.

"New rules even saw couples divorcing to enable them to buy more properties," Knight Frank international residential research analyst Kate Everett-Allen wrote in the report.

"Since September there is some evidence to suggest the rate of price growth has cooled in a few key cities as the new regulations have taken effect."

House prices in Sydney rose 3.2 per cent and by 6.9 per cent on Knight Frank figures.

Elsewhere in the world, Auckland and Vancouver were well ahead of the Australian cities, to which they are often compared.

Despite a new tax on purchases by foreign buyers, which has put a brake on home sales, Vancouver prices rose 24 per cent in the past year.

Houses in Auckland gained more than 15 per cent. 

Michelle Ciesielski, Knight Frank's director of residential research in Australia noted the impact tightened lending practices for housing finance for both local and foreign purchasers in the Australian market.

Building approvals across Australia were up 0.7 per cent in the year ending September 2016, to total 232,200 potential new private houses and apartments.

"Over this time house approvals fell 1.2 per cent while apartment approvals were up 2.5 per cent," she said. 

"This was significantly lower when compared to the 14.3 per cent annual average growth in total approvals experienced over the last three years."

The frenzy in China may be little comfort for local home-buyers who still face a tough battle breaking into the market, despite record low interest rates.

In Sydney, a couple would need to save for more than eight years to accumulate a 20 per cent deposit of $214,600 to buy a median-priced home, according to a recnt Bankwest report.

And there is more price growth to come in the major markets of Sydney and Melbourne in 2017.

Research house CoreLogic is tipping price growth of around 10 per cent in Sydney and around 9 per cent in Melbourne in 2017.

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