BEIJING • New home prices in China extended another month of steady growth in November, after picking up slightly in October, shrugging off a range of government measures to rein in an overheated property market as price gains in smaller cities widened.

China's housing market has been in a boom lasting more than two years, giving the economy a major boost but stirring fears of a property bubble, with the government taking stern measures to curtail speculative buying.

The authorities have been particularly focused on curbing lending for speculation in the housing market in a broad effort to defuse financial risks from a rapid build-up in debt.

Average new home prices in China's 70 major cities rose 0.3 per cent in November from the previous month, in line with October's price gains, Reuters calculated from National Bureau of Statistics (NBS) data out yesterday.

The majority of the 70 cities surveyed by the NBS still reported a monthly price increase for new homes. Fifty cities reported higher prices last month, unchanged from October, indicating broad strength in markets nationwide.

New home prices rose 5.1 per cent year on year in November, down from October's 5.4 per cent increase as the pace of growth slowed in the face of government efforts to engineer a soft landing in the housing market.

Central bank data last week showed household loans, mostly mortgages, rose to 620.5 billion yuan in November from 450.1 billion yuan in October, according to Reuters calculations.

While monthly price rises peaked in September last year at 2.1 per cent nationwide, they have softened only slowly, regaining momentum as buyers shrugged off each new measure to curb speculation.

Prices for new private homes in top-tier cities fell another 0.1 per cent last month, after a 0.1 per cent decline in October, the NBS said in a note accompanying the data.

In the southern boom town of Shenzhen, which borders Hong Kong, prices fell 0.2 per cent after sliding 0.1 per cent in October. They fell 3.1 per cent from a year earlier.

But as mega-cities like Beijing impose increasingly stringent measures, speculators have moved to smaller centres this year where the authorities offer cheap credit and impose few restrictions in the hope of clearing a glut of unsold homes.

Property prices in China's tier-2 cities, mostly sizable provincial capitals, recorded the strongest price growth last month. They rose 0.5 per cent from a 0.3 per cent rise in October, NBS said. The smaller tier-3 cities rose 0.4 per cent from a 0.3 per cent gain in October.

While market watchers do not anticipate significant price declines or a crash, weakness in property investment and construction would drag on broader economic growth.

REUTERS