China’s home prices rise the most in six years

BEIJING — China’s home prices rose the most in more than six years last month, suggesting local government efforts to avert a housing bubble are having a limited effect.

New home prices, excluding subsidised housing, gained last month in 64 of the 70 cities the government tracks, compared with 51 in July, data from the National Bureau of Statistics (NBS) showed yesterday. Prices fell in four cities, compared with 16 a month earlier, and were unchanged in two.

Average new home prices in the 70 cities rose 1.2 per cent last month from July, the biggest increase since January 2010, according to Bloomberg calculations based on the government data. The value of home sales jumped 33 per cent last month from a year earlier, the fastest pace in four months.

The jump in home prices comes in spite of lending curbs which have spread from major cities such as Shanghai and Shenzhen to regional hubs. This may lead to further restrictions as policymakers become increasingly concerned about averting an asset bubble, said Bank of Communications Shanghai-based analyst Xia Dan.

In an effort to deter speculators and to cool prices, the housing authorities in Zhejiang’s provincial capital of Hangzhou announced on Sunday that they would begin to restrict home purchases to some non-local residents.

Effective yesterday, families that are not registered as residents and who already own one or more houses in certain districts cannot buy another home, either new or pre-owned, in restrictions similar to those introduced last month in Suzhou and Xiamen.

China’s top leaders, after a Politburo meeting led by President Xi Jinping, had in July pledged to curb asset bubbles amid a renewed focus on financial stability.

“Price growth accelerated in cities of all tiers,” the NBS said in a statement released with the data. Almost half of the cities where prices increased had larger gains than in July, it added.

Prices climbed a record 4.4 per cent and 3.6 per cent in Shanghai and Beijing, respectively, taking the year-on-year gains to 31 per cent and 24 per cent. Values rose 2.1 per cent in Shenzhen and 2.4 per cent in Guangzhou, both faster than a month earlier.

Home prices climbed the fastest in regional hubs where the local authorities have not introduced curbs. Zhengzhou, the provincial capital of central Henan province, led gains with a 5.5 per cent increase, up from a 2 per cent gain in July.

Prices in Wuxi, a manufacturing base in southern Jiangsu province, followed with a 4.9 per cent gain, compared with 2.7 per cent a month earlier.

However, tightening measures by local governments are unlikely to rein in prices as long as credit remains easily attainable, said Mr Jeffrey Gao, a Hong Kong-based property analyst at Nomura Holdings.

“The local curbs have limited impact as home inventory has already fallen to a low level. Prices will not fall unless the government moves to tighten credit and add more land supply,” he said.

The Chinese authorities are facing a monetary policy dilemma amid rapid home price growth, Mr Zhou Hao, an economist at Commerzbank in Singapore, wrote in a research note yesterday. “The overall monetary policy should remain accommodative as inflation remains subdued and growth is still trending down. However, concern about an asset bubble will limit room for further easing,” he said.

Despite signs of a broadening housing boom, many smaller cities still have a glut of unsold homes.

Prices in the rust-belt city of Dandong, for example, recorded the biggest fall at 2.1 per cent, compared with 2.4 per cent in July. AGENCIES