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March 11, 2010

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Home » Business » Real Estate

City home prices stay on upward fast track

CHINA'S urban property prices rose the fastest in 23 months in February, the National Bureau of Statistics said yesterday.

Real estate prices in 70 major cities on the Chinese mainland jumped 10.7 percent last month, accelerating from a 9.5 percent gain in January and posting the biggest year-on-year increase since April 2008, according to the bureau's Website.

The February lift was the ninth in a row since last June, when property prices in the 70 cities tracked by the government started to register growth following declines for six months.

"It's no surprise that the February figure continued to hit new highs as property prices haven't yet capitulated and the market was still suffering a serious setback this time a year earlier," said Xue Jianxiong, an analyst with China Real Estate Information Corporation, an information, consulting and online services provider.

Loans cut

"Very likely, the coming few months will continue year-on-year increases despite property prices across the country climbing at a slower rate in contracted volume after the central government started to tighten credit requirements," Xue said.

The central bank has raised banks' reserve requirements twice this year and also pledged to cut new loans by 22 percent to 7.5 trillion yuan (US$1.09 trillion).

The clampdown on bank lending and measures introduced late last year to cool the real estate market, including the reintroduction of a 5.5 percent tax on homes sold within five years of purchase, have been cutting transaction volumes and pruning increases.

On a month-over-month basis, real estate prices in the 70 cities advanced 0.9 percent in February, compared to 1.3 percent in January.

State benefits

Across China, prices of new and existing homes jumped 13 percent and 8.5 percent year on year in February while in Shanghai, they rose 10.3 percent and 9.1 percent.

Haikou and Sanya, in south China's Hainan Province, continued to have the largest price growth for new and existing homes.

The two cities are benefiting from a central government decision to turn Hainan into a global tourism showpiece.

Money allocated for real estate development rose 31 percent to 314.4 billion yuan nationwide during the first two months of this year.

Of that, 223.3 billion yuan was for residential projects, an increase of 33 percent from same period a year earlier.

A total of 71.55 million square meters of new property was sold across the country for 411.6 billion yuan between January and February, representing year-on-year growth of 38 percent and 70 percent.


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