Bloomberg News

China Home Prices Gain in Majority of Cities as Curbs Stay

December 17, 2012

China Home Prices Advance in Majority of Cities While Curbs Stay

A woman carrying produce for sale walks past newly built residential housing in Changsha, Hunan Province, China. Photographer: Nelson Ching/Bloomberg

China’s new home prices rose in the majority of cities the government tracks in November as property curbs slowed construction, reducing the supply available for sale.

Prices climbed in 53 of the 70 cities from the previous month, compared with 35 in October, according to data from the National Bureau of Statistics today. That was the most in 18 months. Prices fell in 10 cities.

The government is maintaining property controls, while it said it will seek a higher “quality and efficiency” of growth next year after the annual central economic work conference in Beijing over the weekend. China will stick to its real estate curbs, Liao Yonglin, an official from the Ministry of Land and Resources, said at a press conference in Beijing today, according to a transcript on the ministry’s website.

“Because of the lower new starts in construction, with fewer new projects, prices will continue to rise in the bigger cities,” Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, told Bloomberg Television today. “The government will be more focused on the housing prices in Shanghai and Beijing than in the smaller cities.”

China’s new property starts fell 7.2 percent in the first 11 months from last year to 1.62 billion square meters (17.4 billion square feet), according to statistics bureau data.

A gauge tracking property shares on the Shanghai Composite Index (SHCOMP) rose 0.4 percent at the lunch break, while the benchmark advanced 0.7 percent.

Price Pressures

The western city of Luzhou in Sichuan province led gains in November, with a 0.9 percent increase from October, according to today’s data. Among major cities, Beijing, Guangzhou and Shenzhou rose 0.6 percent each, while home prices in Shanghai climbed 0.2 percent from October. Home prices were unchanged in seven cities.

“There is still rising pressure on home prices, so it’s very difficult for the government to relax the measures,” Ding Shuang, a Hong Kong-based economist with Citigroup Inc., said in a phone interview today. “The government will strengthen the enforcement of the current curbs if not necessarily issue new measures.”

The statistics bureau stopped releasing national average property prices and changed the methodology of the survey from January last year, saying it more accurately reflected the market.

Existing Homes

In its more than two-year effort to rein in prices, the central government raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and placed home-purchase restrictions in about 40 cities.

Home prices were little changed in the first 11 months of this year at 8,791 yuan ($1,411) per square meter (10.76 square feet), according to SouFun Holdings Ltd. (SFUN:US), the nation’s biggest real estate website owner. They rose 0.26 percent last month from October, based on SouFun’s per-square-meter calculations. That was the most in four months.

Existing home prices rose 0.8 percent in Beijing last month from October and increased by 0.2 percent in Shanghai, according to today’s data. Home prices rose in 25 cities from a year earlier, more than double the 12 cities that increased from a year ago in October.

Strong Sales

China’s housing sales in November climbed 18 percent to 595.8 billion yuan ($96 billion) from a month earlier, government data showed.

“What has given developers the confidence is the sales,” Du said. “The past few months were supposed to be the low season, but housing sales have been relatively strong. Next year is expected to be better.”

Some developers have already achieved the year’s sales target. Evergrande Real Estate Group Ltd. (3333) sold 84.6 billion yuan of properties in the first 11 months, 5.8 percent higher than its annual sales target. China Vanke Co. (000002), the country’s biggest developer, sold properties for a total 127.2 billion yuan in the first 11 months, higher than the full-year sales last year.

The recovery in housing will be maintained or even accelerate in 2013, with a 10 percent gain in both home prices and sales from this year, Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd., wrote in a Dec. 13 report. The government may tighten policies in the middle or later next year if housing prices continue to rise, Jin said.

China’s home prices may climb 5 percent in 2013 as growth picks up in the world’s second-largest economy, said Liu Yuan, a researcher in Shanghai at Centaline property Agency Ltd., the country’s biggest real estate brokerage.

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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