China’s property prices rose at a slower pace in September as the government expanded measures to discourage speculation and limit the risk of asset bubbles in the fastest-growing major economy.
Values in 70 cities climbed 9.1 percent from a year earlier, the statistics bureau’s newspaper, China Information News, reported today. That compared with a 9.3 percent increase in August and the median 8.8 percent estimate in a Bloomberg News survey of six economists. Prices rose 0.5 percent from August.
Premier Wen Jiabao’s government tightened down-payment requirements last month, suspended lending for third-home purchases and pledged to speed trials of a property tax that may be rolled out nationwide. Nomura Holdings Inc. predicts that average residential prices may fall as much as 10 percent by the end of next year as cities including Shanghai follow up with their own curbs.
“The authorities may not see the property curbs as successful until prices fall by double-digits from a year earlier, so the current restrictions may last into next year,” said Zhang Zhiwei, a Hong Kong-based economist at investment bank China International Capital Corp., before today’s release. “Cash-rich developers may be able to resist cutting prices for a while.”
Year-on-year price gains have slowed from April’s 12.8 percent, a record for the data series, which began in 2005. Month-on-month, values were unchanged in July and August after a 0.1 percent decline in June.
Transactions tumbled in major cities during the Oct. 1-7 National Day holiday after the extra tightening measures, according to state media reports.
Property Sales
Property sales by volume rose 8.2 percent in the first nine months of the year to 632 million square meters, today’s data showed. The value of sales jumped 15.9 percent to 3.19 trillion yuan ($479 billion).
Today’s numbers came after private data indicating strength in sales in September. In Shanghai, home transactions rose 82 percent by floor area from August, according to UWin Real Estate Information Services Co.
Shimao Property Holdings Ltd., a developer based in the city, reported a 30 percent increase in sales value from the previous month. Beijing-based developer Soho China Ltd. reported last month that it had already met a full-year sales target.
“Transactions may cool as clearer expectations of a property tax encourage home buyers to hold off on purchases,” said CICC’s Zhang. “On the other hand, abundant cash flows may enable developers to continue investment, especially in welfare homes, so that the impact of the property curbs on the overall economy remains limited.”
Property Stocks
Even after gains this month, an index tracking 34 Shanghai- listed property companies has tumbled 20 percent this year, compared with a 12 percent decline in the Shanghai Composite Index.
Investment in real-estate development rose 35 percent to 515.6 billion yuan in September from a year earlier. That compares with a gain of 34.1 percent in August. For the first nine months, investment jumped 36.4 percent from the same period in 2009.
Shanghai followed up on the central government’s Sept. 29 announcement of expanded curbs by limiting home purchases to one per household and pledging to increase the supply of residential land and trial a property tax. Xiamen and Shenzhen also capped the number of home purchases households are allowed to make.
Shanghai Measures
Shanghai’s measures “highlighted the strong determination of the central government and local governments to cool down the property market,” Deutsche Bank AG analysts led by Tony Tsang said in a report last week. “Some bullish market participants might have under-estimated the strength and frequency of the government tightening measures.”
Beijing’s second-hand home sales fell to 18 units on Oct. 1 and Oct. 2 combined, from 1,067 on the last day of September alone, China News reported Oct. 4. Home sales in the eastern city of Suzhou dropped to 169 units on Oct. 1 from 519 the day before, and in Hangzhou halved on Sept. 30 from the previous day, the news service said.
Shanghai may set the property tax at between 30 and 40 basis points and will likely implement it by year-end, the Eastday website reported Oct. 6, citing Yang Hongxu, of the Shanghai-based E-house China research institute.
Values in 70 cities climbed 9.1 percent from a year earlier, the statistics bureau’s newspaper, China Information News, reported today. That compared with a 9.3 percent increase in August and the median 8.8 percent estimate in a Bloomberg News survey of six economists. Prices rose 0.5 percent from August.
Premier Wen Jiabao’s government tightened down-payment requirements last month, suspended lending for third-home purchases and pledged to speed trials of a property tax that may be rolled out nationwide. Nomura Holdings Inc. predicts that average residential prices may fall as much as 10 percent by the end of next year as cities including Shanghai follow up with their own curbs.
“The authorities may not see the property curbs as successful until prices fall by double-digits from a year earlier, so the current restrictions may last into next year,” said Zhang Zhiwei, a Hong Kong-based economist at investment bank China International Capital Corp., before today’s release. “Cash-rich developers may be able to resist cutting prices for a while.”
Year-on-year price gains have slowed from April’s 12.8 percent, a record for the data series, which began in 2005. Month-on-month, values were unchanged in July and August after a 0.1 percent decline in June.
Transactions tumbled in major cities during the Oct. 1-7 National Day holiday after the extra tightening measures, according to state media reports.
Property Sales
Property sales by volume rose 8.2 percent in the first nine months of the year to 632 million square meters, today’s data showed. The value of sales jumped 15.9 percent to 3.19 trillion yuan ($479 billion).
Today’s numbers came after private data indicating strength in sales in September. In Shanghai, home transactions rose 82 percent by floor area from August, according to UWin Real Estate Information Services Co.
Shimao Property Holdings Ltd., a developer based in the city, reported a 30 percent increase in sales value from the previous month. Beijing-based developer Soho China Ltd. reported last month that it had already met a full-year sales target.
“Transactions may cool as clearer expectations of a property tax encourage home buyers to hold off on purchases,” said CICC’s Zhang. “On the other hand, abundant cash flows may enable developers to continue investment, especially in welfare homes, so that the impact of the property curbs on the overall economy remains limited.”
Property Stocks
Even after gains this month, an index tracking 34 Shanghai- listed property companies has tumbled 20 percent this year, compared with a 12 percent decline in the Shanghai Composite Index.
Investment in real-estate development rose 35 percent to 515.6 billion yuan in September from a year earlier. That compares with a gain of 34.1 percent in August. For the first nine months, investment jumped 36.4 percent from the same period in 2009.
Shanghai followed up on the central government’s Sept. 29 announcement of expanded curbs by limiting home purchases to one per household and pledging to increase the supply of residential land and trial a property tax. Xiamen and Shenzhen also capped the number of home purchases households are allowed to make.
Shanghai Measures
Shanghai’s measures “highlighted the strong determination of the central government and local governments to cool down the property market,” Deutsche Bank AG analysts led by Tony Tsang said in a report last week. “Some bullish market participants might have under-estimated the strength and frequency of the government tightening measures.”
Beijing’s second-hand home sales fell to 18 units on Oct. 1 and Oct. 2 combined, from 1,067 on the last day of September alone, China News reported Oct. 4. Home sales in the eastern city of Suzhou dropped to 169 units on Oct. 1 from 519 the day before, and in Hangzhou halved on Sept. 30 from the previous day, the news service said.
Shanghai may set the property tax at between 30 and 40 basis points and will likely implement it by year-end, the Eastday website reported Oct. 6, citing Yang Hongxu, of the Shanghai-based E-house China research institute.
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