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Home prices in 70 major Chinese cities up 6.4% in December

English.news.cn   2011-01-17 09:18:30 FeedbackPrintRSS

Photo taken on Nov. 14,  2010 shows a newly built residential community in east China's Shanghai Municipality.     Property prices in 70 major Chinese cities rose 0.3 percent in November month on month and 7.7 percent year on year, the National Bureau of Statistics (NBS) said on Dec. 10, 2010. The Chinese Academy of Social Sciences (CASS) said recently in its annual report on China's housing conditions that, ordinary commercial residential housing in 35 large and medium-sized cities are, on average, about 29.5 percent overpriced.     (Xinhua/Chen Fei) (xzj)

File photo taken on Nov. 14, 2010 shows a newly built residential community in east China's Shanghai Municipality. (Xinhua/Chen Fei)

BEIJING, Jan. 17 (Xinhua) -- Home prices in 70 major Chinese cities rose 0.3 percent month on month in December and 6.4 percent year on year, the National Bureau of Statistics (NBS) said Monday.

The annualized growth rate dropped from 7.7 percent in November, making December the eighth consecutive month of slowing growth from a peak of 12.8 percent in April last year, when the government stepped up controls to curb prices.

New home prices climbed 7.6 percent year on year last month and 0.3 percent month on month, while prices for second-hand homes rose 5 percent year on year and 0.5 percent month on month, said a statement on the NBS website.

Property sales volume, in terms of floor space, was up 11.5 percent from a year earlier to 218.08 million square meters last month, and the value of sales rose 21.9 percent to more than 1.02 trillion yuan (about 155 billion U.S. dollars).

Property sales for the whole of last year surged 10.1 percent year on year to 1.04 billion square meters, and the sales value was up 18.3 percent to 5.25 trillion yuan, it said.

Property investment last year jumped 33.2 percent year on year to 4.83 trillion yuan. In December alone, 557 billion yuan was invested in the real estate sector, up 12 percent year on year.

Despite a rebound in sales volume and continued month-on-month price rises, market observers still expect the market to cool in the near future.

Liu Yuan, an analyst with Centaline China Property Research, said China's market curbs had begun to take effect, as the annual growth in sales volume in 2010 had slowed to the second lowest level since 1998, only next to the 2008 level, or the economic crisis level.

The Chinese government introduced strict measures to crack down on property speculation and rein in prices last year, including suspending mortgage loans for third home purchases and raising down-payments.

The government has used monetary tools, including hikes in reserve requirements and interest rates to curb asset bubbles. It has also announced the soon to be launched trial property tax in two major cities.

Rising inflationary expectations and abundant liquidity were among the factors behind December's rapid rebound in sales volume, experts say.

A central bank survey last month revealed that in face of surging consumer prices, some 45.2 percent of Chinese consumers intended to invest more for the future, with 37.6 percent willing to deposit their money in banks.

A rapid growth in new loans had also given rise to real estate investment, as Chinese banks had extended 7.95 trillion yuan of loans last year, more than the full-year target of 7.5 trillion yuan, said Zhang Dawei, analyst with Centaline Property.

The State Information Center (SIC) said in its latest report that with continued market tightening and a construction boom in affordable homes, property prices are likely to decline in 2011.

"There could be tougher regulations if prices rebound," it said.

As well as vowing to continue to crack down on market speculation, the government has pledged to build 10 million units of affordable housing in 2011 as a part of its strategy to stabilize the property market.

China has also announced to start property tax trials in the southwestern Chongqing Municipality and Shanghai.

It is widely expected that property tax revenues could create a sustainable source of income for local governments, which often rely on one-time revenues from land sales, and help enact the government's pledge of providing affordable housing.

The SIC report pointed out that an expansion in affordable housing construction is shaping the property market in a more reasonable way.

"Only a dualistic structure that balances the development of both low-cost housing and commercial housing can ensure a stable and healthy market," said the report.

The report also stressed that the government should improve the implementation of tightening policies to prevent rebounds.

Editor: Yang Lina
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