China’s new home prices rose last month in more cities than in September, indicating that the government will refrain from relaxing current restrictions on the property market.
Prices climbed in 35 of the 70 cities that the government tracks, compared with 31 in September, according to data released by the Chinese National Bureau of Statistics yesterday. Prices fell in 17 cities, the data showed.
“With prices rising or unchanged in the majority of the cities, the downward trend in China’s home prices has been restrained,” said Liu Li-gang (劉利剛), a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd.
“Buyers are now holding a wait-and-see position for the policy direction after the new generation of leadership came out,” Liu said.
The government is unlikely to relax property curbs introduced over two years to rein in surging prices that raised concerns about affordability, following the Chinese Communist Party (CCP) unveiling of its next generation of leaders last week.
The measures have had a “relatively good” effect and the government will “steadfastly” enforce property controls, Chinese Housing Minister Jiang Weixin (姜偉新) said in Beijing last week.
The northwestern city of Urumqi led gains last month, with a 0.5 percent increase from September, according to the data. Beijing’s prices rose 0.2 percent, while those in Shanghai and 17 other cities were unchanged.
The government wants to maintain the curbs because steady sales and mild price growth are the “exact situation” it wants to see, while further tightening will damp a tentative recovery in the Chinese economy, Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd, said prior to the data being released.
China’s GDP fell to 7.4 percent in the third quarter from a year earlier, the weakest in three years, while gauges of manufacturing and retail sales have pointed to a recovery.
“The direction of China’s property policies will not have big changes; it is unlikely for the government to relax property policies in 2013,” Jin said.
Home prices rose in 12 cities from a year earlier, the same as in September. With the economy bottoming out, home prices won’t have a “bad performance” next year, Liu said.
Existing home prices were unchanged in Beijing last month from September and increased by 0.2 percent in Shanghai. Real estate prices in China rose 160 percent in the 1998 to 2011 period after the country privatized the property market, according to government data.
In its more than two-year effort to curb the property market, the central government has increased downpayment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and enacted home-purchase restrictions in about 40 cities.
Many Chinese cities are preparing to introduce property tax trials, the China Securities Journal reported on Friday, citing unidentified people.
The central government has not yet decided on their scale and timing, it said.
Private data also has shown the housing market is stabilizing. Home prices gained 0.17 percent last month, advancing for a fifth month, according to SouFun Holdings Ltd (搜房網), owner of the nation’s biggest real estate Web site.
Contracted sales of 11 major developers were 57.3 billion yuan (US$9.2 billion) last month, up 24 percent from September and 41 percent from a year earlier, according to Ryan Li, an analyst at JPMorgan Chase & Co in Hong Kong.
It was the best month since developers started releasing monthly data in January 2009.
China’s housing sales climbed 6.6 percent to 3.88 trillion yuan in the first 10 months of the year, while investment in homes, office buildings, malls and other real estate were up 15.4 percent at 5.76 trillion yuan.
The ministry is on “high alert” if transaction volumes and home prices increase “substantially,” and is “actively” studying expanding a property tax trial, Xinhua news agency said on Tuesday, citing the housing minister.