China Property-Price Gains Slowed in August to 9.3%
Values in 70 major cities climbed 9.3 percent, the statistics bureau’s newspaper, China Information News, reported today. Photographer: Qilai Shen/Bloomberg
Sept. 9 (Bloomberg) -- Robert Sinche, chief strategist at Lily Pond Capital Management LLC, talks about China's policy on the yuan. Sinche, speaking with Carol Massar on Bloomberg Television's "In the Loop With Betty Liu," also discusses the potential that the Bank of Japan may attempt to devalue the yen and the outlook for the U.S. dollar. (Source: Bloomberg)
China’s property prices rose at the slowest pace in eight months from a year earlier in August as officials cracked down on speculation and multiple home purchases.
Values in 70 major cities climbed 9.3 percent, the statistics bureau’s newspaper, China Information News, reported today. That was less than the 10.3 percent increase in July and the median 10 percent estimate in a Bloomberg News survey of eight economists. Prices were unchanged from July.
The report reduces the case for Premier Wen Jiabao’s government to implement further tightening measures to damp asset bubbles in the world’s fastest-growing major economy. Property stocks dropped the most since June 30 in the past two days on speculation policy makers would take additional steps.
“Despite reports that sales and prices rose in August in a few cities, nationwide data showed that sales were not as strong,” said Wang Tao, a Beijing-based economist at UBS AG. “This should be relatively positive for the stock market as fear of imminent new property tightening steps should be alleviated.”
A jump in transactions in August from July stoked speculation that the government could extend its crackdown. Steps could include stopping loans to real estate developers, compulsory lowering of home prices, and a ban on third-home purchases, the 21st Century Business Herald reported Sept. 8.
Higher Sales
The value of August sales rose about 15 percent to 353.3 billion yuan ($52.1 billion) from July and the volume also increased, today’s data showed. China Vanke Co., the nation’s largest listed developer, reported a 149 percent jump in August sales from a year earlier, and Poly Real Estate Group Co., the second largest, said sales almost doubled.
Today’s data “may not be consistent with the latest phenomena of surging home sales and record price for land sales,” which may “rekindle the debate on the quality of housing data,” saidShen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd.
Data compiled by Soufun.com, the nation’s largest property website, showed housing transactions in Shenzhen surged 84 percent last month from July and rose 23 percent in Beijing. Prices in Beijing gained 12.3 percent in August over the previous month and rose almost 7 percent in Shenzhen, according to Soufun. By contrast, the statistics data today showed new home prices in Beijing stayed unchanged from July and costs in Shenzhen dropped 0.3 percent.
Tug of War
Despite softening price gains compared to 2009, month-on- month figures for prices highlight that challenges remain for policy makers. A 0.1 percent decline in June was the first in 16 months and prices have now stayed unchanged for two months on that basis.
“This is a tug of war between the government and property developers and rebounding transactions may back some developers’ resolve not to cut prices,” said Mizuho’s Shen. “It’s the government’s credibility on the line if property prices fail to drop.”
Ken Peng, a Beijing-based economist at Citigroup Inc. warned this week that the government could restrict pre-sales of apartments, further tighten mortgage rules and consider introducing a property tax. By contrast, Jing Ulrich, chairwoman of China equities and commodities at JPMorgan Chase & Co., said Sept. 8 that China doesn’t need additional measures because an increasing supply of affordable housing will damp prices.
Investment in real-estate development rose 34.1 percent to 449 billion yuan in August from a year earlier, the statistics bureau newspaper said today. That compared with 33 percent for July and 36.7 percent gain for the first eight months.
Billionaire Vincent Lo, chairman of Shanghai-based developer Shui On Land Ltd., said on Aug. 19 he expected price cuts to become more common in the second half due to rising supplies of residential properties coming into the market.
A wave of new apartments is due to come onto the market in September and October which will trigger a decline in prices as developers compete to move their inventory, Stephen Green, head of China research at Standard Chartered Plc, said yesterday.
--Li Yanping, Huang Zhe. With assistance from Jay Wang in Singapore. Editors: Nerys Avery, Chris Anstey.
To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 oryli16@bloomberg.net
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