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House prices rise in December

By Hu Yuanyuan | China Daily | Updated: 2013-01-05 08:35

House prices rise in December

First year-on-year increase in nine months 'indicates market rebound'

China's home prices recorded their first year-on-year increase in nine months in December, a survey showed on Friday.

Figures from the China Index Academy, a Beijing-based real estate research institute, reported that the average price of new homes in 100 monitored cities was 9,712 yuan ($1,558) per square meter during the month, up 0.03 percent from December 2011.

Prices rose 0.23 percent from November, the seventh consecutive monthly rise, it said in a statement. An increase of 0.26 percent was recorded in November from October.

Fifty-seven of the 100 cities saw a rise in property prices, down from 60 in November, and 43 cities experienced a fall, up from November's 38.

The average price in 10 key cities, including Beijing and Shanghai, stood at 16,157 yuan per square meter, up 0.45 percent on the previous month and an increase of 1.06 percent on the same period the previous year, according to the academy.

"The price of both new homes and pre-owned homes in the 10 key cities increased at a quicker pace than the national average, indicating the market rebound was mainly recorded in major cities," said Huang Yu, the academy's vice-president.

"The trend will continue this year, with cities that have a limited supply facing more pressure from price hikes."

Gu Yunchang, deputy head of the China Real Estate and Housing Research Association, agreed.

"Demand in those big cities with the home purchase restriction policies in place was much stronger than those third- and fourth-tier cities, and that's why we are seeing some property developers going back to first-tier cities again, after the fast expansion in lower tier cities over the past few years," Gu said on an online forum hosted by the property website, house.china.com.cn.

China's improved economic outlook, a worsening supply-demand relationship and the slowed release of new property, all fuelled market expectations of further price hikes, industry analysts said.

Most economists are forecasting a pick-up in China's GDP growth this year.

Qu Hongbin, HSBC's chief economist in China, said recent it is expecting modest growth of around 8.6 percent in 2013, despite ongoing external economic headwinds.

Property experts suggest that this growing economic demand will have a knock-on effect on the property market.

Zhang Ping, head of research at the international real estate service provider Cushman & Wakefield, said: "We see strong pent-up demand after a few years of constraint in the property market."

He added that home prices will also be largely affected by the government's monetary policy, suggesting that its rebound last year was partly triggered by two cuts in interest rates by the central bank.

Prices could also be affected this year by a smaller supply of new development land, being sold at higher prices.

According to figures from the Ministry of Land and Resources on Tuesday, China's land supply for property from January to November dropped 8 percent year-on-year.

But prices have been rising, as competition heats up between developers, flush with cash.

Despite strict ongoing property control measures, many large property developers reported good sales and improved finances last year.

Last month, China Vanke Co Ltd and Greenland Group bought a plot of land for commercial use in Shanghai for 5.43 billion yuan, setting a record price for the city's property sector.

Yan Jinming, a professor specializing in land management at Renmin University of China, said that with property land supply unlikely to improve next year, the land ministry must increase the proportion being made available to residential development, to avoid any further rises in land prices.

huyuanyuan@chinadaily.com.cn

(China Daily 01/05/2013 page9)

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