Mon, Sep 19, 2011 - Page 11 News List

Home prices rise in China despite government curbs

Bloomberg

Visitors look at a model for an urban planning project for a central business district in Beijing, China, during a commercial fair in Beijing on Thursday. Soaring property prices are a major source of concern in China.

Photo: AFP

China’s new-home prices rose last month in all 70 cities monitored by policymakers, challenging the government’s efforts this year to control property prices.

Prices in Beijing rose 1.9 percent from a year ago, while those in Shanghai increased 2.8 percent, the statistics bureau said on its Web site yesterday.

China’s measures to control its property market are at a critical stage and the nation needs to focus efforts on curbing price increases in less affluent cities, Chinese Premier Wen Jiabao (溫家寶) said on Sept. 1. The government said in July that it would rein in residential prices in smaller cities after it raised down- payment requirements and mortgage rates earlier this year.

“Asset prices in China’s second and third-tier cities are still rising rapidly, as local governments are reluctant to place more strict policies,” Liu Li-Gang (劉利剛), a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd, said in a telephone interview. “Especially some western and central cities are facing big pressure to pay out debts, while their main revenue comes from land sales.”

The central city of Nanchang posted the biggest increase among the 70 cities, climbing 9.1 percent, the statistics bureau’s data for year-on-year showed. Prices Urumqi rose 8.8 percent, the second-biggest gain.

Only two cities responded to the government’s July call for added restrictions on housing purchase, compared with the 40 metropolitan areas, including Beijing and Guangzhou, that tightened rules earlier in the year.

Property prices are too high according to 75.6 percent of respondents to a central bank survey on Thursday, the highest level since real-estate data were included in the quarterly poll in 2009. The proportion of households that plan to buy property next quarter dropped 0.4 percentage point to 14.2 percent, the survey showed.

Prices in Beijing, Shanghai and 29 of 68 other cities monitored by the government were unchanged from July, the bureau said.

“It’s hard to tell where the turning point of China’s housing prices is as the country is so big,” Yao Wei (姚煒), a Hong Kong-based economist with Societe Generale SA, said ahead of the release yesterday. “For sure home prices will fall first in cities that imposed the strictest measures.”

Existing home prices in Beijing last month rose 1.9 percent from a year earlier, while prices in Shanghai rose 3.7 percent, the statistics bureau said.

Property companies reported mixed results last month. Country Garden Holdings Co said its sales hit a record at 5.9 billion yuan (US$924 million), while China Vanke Co, the nation’s biggest developer, said sales dropped 13 percent from a year earlier.

There are no signs of a significant sales slowdown this month as most developers said their sales-to-date are on track with more new projects, according to a Deutsche Bank report on Wednesday led by analysts, including Tony Tsang.

China’s property prices may retreat in the next 12 to 18 months as banks curb loans to developers, Hong Kong billionaire developer Vincent Lo (羅康瑞) said earlier this month in an interview.

Some cities that posted rapid gains in home prices are facing pressure to bring them down, according to Societe Generale, though it’s unlikely the government will issue more nationwide property policies.

“China’s property policies are in a ‘deadlock’ right now,” Yao said. “Many local governments have complained that they didn’t want more curbs.”

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