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China home prices head for the roof
By Cao Qian and Zhang Fengming |
November 11, 2009, Wednesday
|
Print Edition
Print Edition
CHINA'S urban housing prices rose in October by the largest amount in more than a year as a buying spree played out amid abundant liquidity.
Housing prices in 70 major cities jumped 3.8 percent last month, the biggest year-on-year increase since September 2008, the National Development and Reform Commission said yesterday on its Website.
The October growth was the fifth gain in a row since June, when property prices in the 70 cities started to rebound following six straight months of decline, according to the country's top economic planner.
On a month-to-month basis, property prices in October advanced 0.7 percent nationwide, the eighth consecutive monthly gain.
In addition, the growth of property sales by value accelerated to 79 percent in the first 10 months from a 73 percent gain in the first three quarters, the National Bureau of Statistics said in a separate statement.
And real estate investment in China during the 10-month period rose 18.9 percent, up from an increase of 17.7 percent in the nine months ending September, according to the statistics bureau.
"Demand for properties has remained robust across the country as inflation expectations, coupled with a possible inflow of 'hot money' from overseas, have made real estate investment extremely active since the second quarter of this year," said Ma Ji, head of research at Shanghai Centaline Property Consultants Ltd.
China has shifted to a relaxed monetary policy this year in a major effort to boost economic growth, creating a tide of liquidity. The country's banks issued a record 8.7 trillion yuan (US$1.27 trillion) in new yuan-backed credit in the first nine months of this year, an increase of 5.19 trillion yuan from the same period a year ago.
The new lending far eclipsed China's whole-year target of 5 trillion yuan set in the beginning of this year. The flood of credit has created inflation expectations - though they are not an immediate worry, said CITIC Ka Wah Bank Chief Economist Liao Qun.
Gold and property are always considered good buys during inflationary times.
Li Wei, a Standard Chartered Bank economist, said earlier that speculative hot money may be returning to China to capitalize on the country's early recovery from the worldwide economic downturn.
China's economy expanded 8.9 percent year on year in the third quarter, up from a rise of 7.9 percent in the second quarter and a 6.1 percent gain in the first three months.
Across the 70 cities monitored by the NDRC, housing prices jumped the most - 13.8 percent from a year earlier - in Shenzhen. On a month-over-month basis, they edged up 0.4 percent, the NDRC said.
In Shanghai, property price rose 3.9 percent from a year earlier and 1 percent from September.
"Shanghai's housing market has been gaining momentum since the second quarter, and we expect buying sentiment to remain high during the remaining months of the year despite rapid price increases over the past months," said Centaline's Ma.
"A likely end to the preferential measures introduced a year earlier by the local government, coupled with relatively inadequate supply, will continue to boost local real estate transactions."
Transactions for existing homes rose 30 to 40 percent at Centaline's 160 branches across the city over the past few weeks, Ma said.
The city government introduced a series of stimulus measures in November 2008 to help boost the market, and many of them are scheduled to expire at the end of December.
The deed tax levied on home transactions is cut to 1 percent for first-time home buyers and the stamp duty is temporarily scrapped. First-time buyers also are eligible for reduced down payments and lower mortgage rates.
The likelihood that banks may rein in loans amid the current property boom is also pushing more people to buy now.
Housing prices in 70 major cities jumped 3.8 percent last month, the biggest year-on-year increase since September 2008, the National Development and Reform Commission said yesterday on its Website.
The October growth was the fifth gain in a row since June, when property prices in the 70 cities started to rebound following six straight months of decline, according to the country's top economic planner.
On a month-to-month basis, property prices in October advanced 0.7 percent nationwide, the eighth consecutive monthly gain.
In addition, the growth of property sales by value accelerated to 79 percent in the first 10 months from a 73 percent gain in the first three quarters, the National Bureau of Statistics said in a separate statement.
And real estate investment in China during the 10-month period rose 18.9 percent, up from an increase of 17.7 percent in the nine months ending September, according to the statistics bureau.
"Demand for properties has remained robust across the country as inflation expectations, coupled with a possible inflow of 'hot money' from overseas, have made real estate investment extremely active since the second quarter of this year," said Ma Ji, head of research at Shanghai Centaline Property Consultants Ltd.
China has shifted to a relaxed monetary policy this year in a major effort to boost economic growth, creating a tide of liquidity. The country's banks issued a record 8.7 trillion yuan (US$1.27 trillion) in new yuan-backed credit in the first nine months of this year, an increase of 5.19 trillion yuan from the same period a year ago.
The new lending far eclipsed China's whole-year target of 5 trillion yuan set in the beginning of this year. The flood of credit has created inflation expectations - though they are not an immediate worry, said CITIC Ka Wah Bank Chief Economist Liao Qun.
Gold and property are always considered good buys during inflationary times.
Li Wei, a Standard Chartered Bank economist, said earlier that speculative hot money may be returning to China to capitalize on the country's early recovery from the worldwide economic downturn.
China's economy expanded 8.9 percent year on year in the third quarter, up from a rise of 7.9 percent in the second quarter and a 6.1 percent gain in the first three months.
Across the 70 cities monitored by the NDRC, housing prices jumped the most - 13.8 percent from a year earlier - in Shenzhen. On a month-over-month basis, they edged up 0.4 percent, the NDRC said.
In Shanghai, property price rose 3.9 percent from a year earlier and 1 percent from September.
"Shanghai's housing market has been gaining momentum since the second quarter, and we expect buying sentiment to remain high during the remaining months of the year despite rapid price increases over the past months," said Centaline's Ma.
"A likely end to the preferential measures introduced a year earlier by the local government, coupled with relatively inadequate supply, will continue to boost local real estate transactions."
Transactions for existing homes rose 30 to 40 percent at Centaline's 160 branches across the city over the past few weeks, Ma said.
The city government introduced a series of stimulus measures in November 2008 to help boost the market, and many of them are scheduled to expire at the end of December.
The deed tax levied on home transactions is cut to 1 percent for first-time home buyers and the stamp duty is temporarily scrapped. First-time buyers also are eligible for reduced down payments and lower mortgage rates.
The likelihood that banks may rein in loans amid the current property boom is also pushing more people to buy now.
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