China home prices rise the most in six years

The jump in China's home prices comes in spite of lending curbs, which have spread from major cities such as Shanghai (pictured) and Shenzhen to regional hubs.
The jump in China's home prices comes in spite of lending curbs, which have spread from major cities such as Shanghai (above) and Shenzhen to regional hubs.PHOTO: AGENCE FRANCE- PRESSE

New-home prices in August rise in 64 of 70 cities tracked; this is despite lending curbs in big cities, regional hubs

BEIJING • Home prices in China rose the most in more than six years last month, suggesting that local government efforts to avert a housing bubble are having only a limited effect.

New-home prices, excluding government-subsidised housing, in August gained in 64 of the 70 cities the government tracks, compared with 51 in July, the National Bureau of Statistics said yesterday.

Prices fell in four cities, compared with 16 a month earlier, and were unchanged in two.

Average new-home prices in the 70 cities rose 1.2 per cent in August from July, the biggest increase since January 2010, according to Bloomberg calculations based on the government data. The value of home sales jumped 33 per cent last month from a year earlier, the fastest pace in four months.

The jump in home prices comes in spite of lending curbs, which have spread from major cities such as Shanghai and Shenzhen to regional hubs. Shanghai-based analyst Xia Dan from Bank of Communications said this may lead to further restrictions as policymakers become increasingly concerned about averting an asset bubble.

Hangzhou, Zhejiang's provincial capital, on Sunday halted home sales to some non-local residents, adding to similar restrictions introduced last month in Suzhou and Xiamen. China's top leaders, after a politburo meeting led by President Xi Jinping, had in July pledged to curb asset bubbles amid a renewed focus on financial stability.

The statistics bureau, in a statement released with the price data, said: "Price growth accelerated in cities of all tiers." Almost half of the cities where prices increased had larger gains than in July, it added.

Prices climbed a record 4.4 per cent and 3.6 per cent in Shanghai and Beijing respectively, taking the year-on-year gains to 31 per cent and 24 per cent. Values rose 2.1 per cent in Shenzhen and 2.4 per cent in Guangzhou, both faster than a month earlier.

Prices climbed the fastest in regional hubs where local authorities have not introduced curbs.

However, said Mr Jeffrey Gao, a property analyst at Nomura Holdings, tightening measures from local governments are unlikely to rein in prices as long as credit remains easily attainable.

"The local curbs have limited impact as home inventory has already fallen to a low level," Mr Gao said. "Prices will not fall unless the government moves to tighten credit and add more land supply."

Mr Zhou Hao, an economist at Commerzbank in Singapore, wrote in a note that the Chinese authorities are facing a monetary policy dilemma amid "rapid" home-price growth. He said: "The overall monetary policy should remain accommodative as inflation remains subdued and growth is still trending down. However, concern about an asset bubble will limit room for further easing."

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A version of this article appeared in the print edition of The Straits Times on September 20, 2016, with the headline 'China home prices rise the most in six years'. Print Edition | Subscribe