New Home Prices Up in Most China Cities - WSJ.com

SHANGHAI—More Chinese cities saw new home prices rise in April compared with the previous month, and price growth has risen a tad in some major cities despite a fall in transactions, underscoring challenges the central government faces in curbing prices.

Faced with public anger over unaffordable housing prices, China's authorities have progressively implemented a series of measures to rein in speculation in the property market, including restrictions on property sales, stepped-up monitoring of prices and tighter monetary policies.

Analysts reckon the government will likely be unsatisfied with the price growth in certain cities but note that some property developers have started to cut home prices this month.

Prices of newly built homes in 56 of the 70 large and medium-sized Chinese cities covered in a government survey rose in April from the previous month, up from 49 cities in March, the National Bureau of Statistics said in a statement Wednesday, indicating that prices are still holding up despite a fall in transaction volume.

On a year-to-year basis, growth in housing prices has shown a clearer trend of moderating. Prices of newly built homes in Beijing rose 2.8% in April, slower than the 4.9% and 6.8% rise recorded in March and February, respectively. In Shanghai, prices of newly built homes rose 1.3% last month, decelerating from the 1.7% and 2.3% recorded in March and February respectively.

Prices of newly built homes in 67 of the 70 cities covered by the survey rose in April from a year earlier, unchanged from the 67 recorded in March and lower than the 68 recorded in both January and February, the statement said.

"It could be embarrassing for the [Chinese] government if they cannot soften prices. Prices are high due to ample liquidity stemming from the country's macroeconomic policies, and I wouldn't rule out further administrative measures, such as an expansion of home purchase limits to more cities from the current 40 cities," said Oscar Choi, a property analyst from Citigroup.

Mr. Choi noted that some property developers, such as China Overseas Land & Investment, Country Garden Holdings Co. and Shimao Property Holdings, started to offer discounts to boost sales and cash flow this month.

Among the major cities, Beijing's prices of newly built homes rose 0.1% in April from March, when prices were unchanged from February, and slower than February's 0.4% month-to-month increase. Prices of new homes in Shanghai rose 0.3% in April from a month earlier, faster than March's 0.2% increase but slower than February's 0.9% month-to-month gain.

Prices of newly built homes in Shenzhen rose 0.7% in April from March, when prices were unchanged from February and slower than February's 1.0% month-to-month rise.

The price growth is still below the headline rate of inflation, said Danny Bao, an analyst at Daiwa Capital Markets, adding that he expects to see continued softening in home prices and transaction volume in the next two months.

China's inflation rate eased to 5.3% in April, from 5.4% in March.

"We're not going to see sharp price cuts. There's going to be gradual price declines in coastal cities, and for the inland cities, there could be more inflationary pressure on prices, perhaps 4%-5% on an annual basis," said Mr. Bao. "I don't think further tightening measures are imminent though, it has only been two to three months since the home purchase restrictions were implemented."

April is the fourth month for which China has released house price data for individual cities, after scrapping a monthly index of average property prices in 70 large and medium-sized cities.

China's April property sales registered their first decline since September in terms of floor space sold, falling 9.9% from a year earlier and 23.6% on-month, according to data from the bureau last week, following government tightening measures such as bans on second-home buying in some cities early this year.

via online.wsj.com

Aha.