New home prices quicken in Shanghai

New home prices rose in 67 Chinese cities last month, with growth in Beijing and Shanghai accelerating for the first time since the government stepped up efforts this year to curb growth.

In Beijing, new home prices rose 2.2 per cent last month from a year earlier, compared with 2.1 per cent in May, while in Shanghai they climbed 2.2 per cent, compared with 1.4 per cent growth the previous month, the statistics bureau said on its website yesterday.

China’s Cabinet said last week it will expand measures to rein in residential prices to smaller cities after limiting home purchases in metropolitan areas, including Beijing and Shanghai.

The government is intensifying real-estate restrictions nationwide after developers posted gains in first-half sales and housing transactions climbed 31 per cent last month, even as China increased downpayments on some mortgages this year.

“China has negative interest rates right now with high inflation, so it’s not surprising that people are back to higher-yielding assets such as real estate,” said Mr Liu Li-Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group.

China’s inflation hit a three-year high of 6.4 per cent last month and has breached the government’s 4 per cent ceiling every month this year. The central bank raised interest rates five times since October, including the July 6 decision to increase the one-year deposit rate to 3.5 per cent.

Home prices in the southern business hub of Guangzhou rose 5.4 per cent in June from a year ago, compared with 5.1 per cent in May.

Prices in the western city of Chongqing jumped 5.8 per cent, compared with 5.3 per cent in May, according to the statistics bureau. More than half of the 70 cities the government tracks matched the gains in May or posted faster growth, the data showed.

Urumqi, the capital of western Xinjiang province, posted the biggest gain at 9.2 per cent last month, while the southern tourism city of Sanya in Hainan island had the biggest decline of 2 per cent last month.

Source : Today – 19 Jul 2011

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