Sept rise in Chinese home prices at year’s high

China’s home prices rose at the fastest pace in a year in September as record lending and stimulus spending spur a recovery in the world’s fastest-growing major economy. Prices in 70 cities climbed 2.8 per cent from a year earlier after gaining 2 per cent in August, the National Bureau of Statistics said on its website yesterday.

More expensive: Home prices in 70 Chinese cities climbed 2.8 per cent in September from a year earlier after gaining 2 per cent in August

Shenzhen led the gains as a rebound in manufacturing and investment helps cement China’s economic recovery. The Shanghai stock index has gained 64 per cent in 2009, raising concern that asset bubbles may be building after 8.67 trillion yuan (S$1.77 trillion) of new local-currency loans this year.

The Chinese government will seek to maintain growth and may not tighten lending even as property prices rise, said analyst Raymond Cheng. Gains in Chinese home prices are still ‘acceptable’ in most cities, apart from those in Shanghai, Beijing, Shenzhen and Hangzhou, he added. ‘To maintain its overall GDP number, I don’t think the Chinese government will substantially change its policy,’ Mr Cheng, a Hong Kong-based analyst at Credit Suisse AG, said before yesterday’s announcement.

Liu Mingkang, chairman of China’s banking regulatory commission, said on Oct 9 that it was too early to talk about an exit strategy for China’s stimulus efforts as the economy ‘may face a bumpy road ahead’.

China’s home sales jumped 73.4 per cent in the first nine months of 2009 from a year earlier to 2.75 trillion yuan, the bureau said. That was up from a 70 per cent gain in the first eight months. By floor area, sales climbed 44.8 per cent, up from 43 per cent.

China Vanke Co, the country’s biggest listed developer, said apartment sales rose 27 per cent last month from a year earlier. Poly Real Estate Group Co, the second biggest, quadrupled September sales from a year ago.

The world’s third-biggest economy grew 7.9 per cent in the second quarter from a year earlier, after a 6.1 per cent gain in the first three months.

Investment in property development grew 17.7 per cent during the period, the statistics bureau said yesterday. That was an increase from 14.7 per cent.

Shenzhen’s housing price index rose 11.1 per cent in September from a year earlier, the National Development and Reform Commission said on its website yesterday.

Source : Business Times – 16 Oct 2009