Bloomberg News

China’s November Housing Transactions Rebounds as Prices Fall

December 12, 2011

Dec. 9 (Bloomberg) -- China’s November housing transactions rose 12 percent, rebounding from a decline last month as lower home prices attracted buyers.

The value of homes sold last month climbed to 416.4 billion yuan ($65.4 billion), based on data from the National Bureau of Statistics today. That’s up from 372.3 billion yuan in October when housing sales slumped 25 percent, the first retreat in three months as the government intensified measures to cool the housing market this year.

China’s residential values fell for a third month in November as developers cut prices to boost sales amid expanded housing curbs, according to SouFun Holdings Ltd. The government this year increased down-payment requirements and mortgage rates on some homes and imposed housing purchase restrictions in about 40 cities to avert a housing bubble.

“The rebound is normal because the home transaction data is volatile in the short term,” said Xiao Jian, a Beijing-based property analyst at South West Securities Co. “It doesn’t change the long-term downward momentum because the government’s curbs are still in place.”

Investments in homes, office buildings, malls and other types of real estate climbed 30 percent to 5.5 trillion yuan in the first 11 months this year, the statistics bureau said today. New property construction climbed 21 percent to 1.7 billion square meters (18.3 billion square feet).

Premier Wen Jiabao has said the government won’t relax property curbs as he fine-tunes other economic policies. The central bank also increased interest rates three times and reserves ratio six times in 2011, before cutting the reserve requirement this month for the first time in three years.

‘Tipping Point’

China’s property market has reached a “tipping point” and the slowdown in the housing industry will have a spillover effect on demand for steel and other construction materials, according to Nomura Holdings Inc. The risk of economic growth falling to less than 8 percent in the first quarter is also higher than before because of the housing market, Zhang Zhiwei, a Hong Kong-based economist at Nomura, said last month.

Home sales volume rose 7.5 percent in the first 11 months from a year earlier to 796 million square meters, according to the data.

“One explanation for the increase in home transactions is some of the October data may have been postponed,” said Johnson Hu, a Hong Kong-based property analyst for at CIMB-GK Securities Research.

Residential property investments accounted for 6.1 percent of the country’s gross domestic product last year, according to Citigroup Inc.

China’s home prices fell in 33 of 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of national average housing data this year. The government is scheduled to announce its November data on Dec. 18.

China’s property prices are about to reach a “turning point,” with developers facing tighter liquidity, the central bank said on December 2, citing a research report by its statistics department.

--Bonnie Cao. With assistance from Zhe Huang in Beijing. Editors: Linus Chua, Malcolm Scott

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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