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House prices rise faster in more cities

By Cherry Cao (Shanghai Daily)

08:21, March 19, 2013

HOUSE prices rose faster in most Chinese cities last month, with first-tier cities seeing the biggest gains, the National Bureau of Statistics said yesterday.

Excluding government-subsidized affordable housing, prices rose in 66 of the 70 cities monitored by the bureau, compared with 53 cities in January. Prices were flat in three cities while only one registered a fall.

Prices in Beijing and Guangzhou were 3.1 percent higher than the previous month, the fastest rise across the country.

Shanghai and Shenzhen followed with increases of 2.3 percent and 2.2 percent, respectively.

In January, Shenzhen saw the biggest gain of 2.2 percent, followed by Beijing's 2.1 percent and Guangzhou's 2 percent. Shanghai gained 1.3 percent in January.

Year on year, new home prices rose in 62 of the 70 cities, with a maximum increase of 8.2 percent. That compared to 53 in January, when the largest rise was 4.7 percent.

"Continuously improving sentiment in the housing market, mainly fueled by demand from owner-occupiers, has been boosting home prices around the country, most notably in large cities," said Zhang Hongwei, a research director with Tospur, a Shanghai-based real estate consulting firm. "Sufficient market liquidity, meanwhile, serves as a key factor contributing to home price increases."

However, he expects the temporary rebound in the property market to be stifled after local authority curbs take shape. The current boom cannot reflect the market trend, Zhang said.

New home purchases totaled 94.94 million square meters in China during the first two months of this year, a year-on-year increase of 55.2 percent, according to bureau data. By value, they surged 87.2 percent year on year to 630.1 billion yuan (US$100 billion).

Total social financing - an indicator of overall liquidity which includes funds raised through bank loans, corporate bonds, equity financing, foreign direct investment, bankers' acceptances, direct company lending and external debt - jumped more than 50 percent month on month and more than doubled from a year ago to 2.54 trillion yuan in January, according to data released by the People's Bank of China.

In the existing home market, 66 cities registered price increases in February, compared to 51 in January. The number of cities where prices gained from a year earlier also rose from 36 in January to 49 last month.

In the near term, the central government's 20 percent tax on profits from property sales, aimed to deter speculation, could lead to rising prices for new homes as buyers shift from the existing home market to avoid the tax that owners would add on, Zhang said.

Qi Ji, vice minister of housing and urban-rural development, suggested on the sidelines of the just-concluded "two sessions" in Beijing that local governments will stipulate much more specified property curbs guided by central policy by the end of March.

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