China Sept. home price growth at near 3-year high
By Xiaoyi Shao and Jonathan Standing, ReutersBEIJING--China's home prices rose the most in nearly three years in September, adding to fears that a property bubble is emerging heading into a Communist Party leaders' meeting next month.
October 23, 2013, 12:08 am TWN
Average new home prices in 70 major Chinese cites climbed 9.1 percent last month from a year ago, led by a surge in big cities including Beijing and Shanghai, according to Reuters calculations.
The increase was the biggest since January 2011, showing China's four-year-long campaign to keep property prices under control has had limited and uneven success.
Shares of property developers in Shanghai .SSEP and Hong Kong .HSNP fell on concerns Beijing may announce fresh measures to curb home prices, which could risk a fresh slowdown in the world's second-largest economy.
The focus now turns to whether the government will act at the ruling party's plenum due in November.
“With the issue in the property market becoming more severe, the plenum month should touch upon the problem,” said Wang Jun, a researcher at the China Centre for International Economic Exchanges (CCIEE), a government think-tank.
“I think the reform agenda unveiled on the party plenum will involve some land reform policies,” Wang said.
The meeting will lay out blueprints for the government's economic agenda for the next decade.
The figures from the National Bureau of Statistics data on Tuesday showed the largest cities continued to see rises well above the national average, with prices up 16 percent in Beijing, 17 percent in Shanghai and about 20 percent in the southern cities of Guangzhou and Shenzhen.
The rises in those four cities were also the largest since January 2011. Prices had risen 8.3 year-on-year in August.
The government is concerned about a property bubble and the potential for social unrest as inequality over access to housing grows, but also is mindful that property is a major growth area in an economy where overall expansion is slowing.
Threat of a Bubble
The economy is on track to achieve the government's growth target of 7.5 percent in 2013, though that figure would be a two-decade low.
Property is still seen by many Chinese as the safest investment, while central government exhortations to local authorities to control prices have met with resistance because many rely on land sales to boost their coffers.
Policy making is also complicated by a divergence in housing inflation between big cities, where prices are rising rapidly, and small ones, where the rises tend to be smaller.
“There are overheating signs in tier-1 cities. The central government should take some measures, at least including stricter implementation of existing measures,” said Wang Juelin, a retired former deputy head of research at the Ministry of Housing.
In the latest policy move, the Land Ministry has required major cities, including Beijing and Shanghai, to make the amount of residential land available higher than the average over the past five years.
“Some targeted actions may be taken in the coming months, including a tougher tone or reiteration of current tightening bias by government officials, tighter controls over sales of high-end houses,” said UBS economist Harrison Hu in a research note.
Some of the items possibly on the agenda for the plenum include pushing forward land reform to increase housing supply, expanding property taxes and increasing the supply of affordable housing.