Property market exuberance could prompt authorities to step up curbs: Analysts
New home prices in 70 major cities across China rose an average of 0.8 per cent in January from the same month a year earlier, according to data released yesterday by the National Bureau of Statistics, snapping 10 months of decline and raising the risk that the central government may move to bolster a three-year campaign to curb property inflation.
From the previous month, home prices in the cities rose by an average of 0.7 per cent in January, after a 0.4 per cent rise in December, according to Reuters’ calculations from the NBS data.
The data came only two days after China’s Cabinet restated intentions to extend a pilot property-tax programme to more cities and urged local authorities to put price-control targets on new homes in a fresh bid to calm frothy real estate markets.
Many investors expect Beijing to announce new measures soon to temper stubbornly high house prices that have largely defied cooling efforts so far, and rumours of fresh curbs had already hit equities in China over the last few weeks.
“The rebound is to a large extent driven by loose monetary policy. We expect the rebound of property prices will force the government to tighten monetary policy in coming months,” said Mr Zhang Zhiwei, Chief China Economist at Nomura in Hong Kong.
Home prices rose month-on-month in 53 of the 70 cities in January, the NBS said, confirming signs of a broad recovery in the property market.
China’s government has spent three years implementing policies to rein in speculative real estate activity, but home prices are still beyond the reach of many middle class citizens, fuelling social discontent.
Beijing is also mindful that real estate, which directly affects around 40 other business sectors in China, is a key driver in the world’s second-largest economy, which is recovering from its worst annual downturn in 13 years.
Despite the latest data, Mr Liu Jianwei, a senior statistician at the NBS, played down the risk of a sustained surge in prices in a separate statement.
“With the government’s property measures being effectively implemented, the upward home price pressure seen starting from the fourth quarter of last year is expected to fade and there is no basis for home prices to experience an overall big rebound,” he said.
Source : Today – 23 Feb 2013