China April housing inflation quickens to two year high

BEIJING Sat May 18, 2013 4:28am EDT

A salesperson (R) talks to a customer behind models of a residential compound at a real estate exhibition in Wuxi, Jiangsu province May 18, 2013. REUTERS/Stringer

A salesperson (R) talks to a customer behind models of a residential compound at a real estate exhibition in Wuxi, Jiangsu province May 18, 2013.

Credit: Reuters/Stringer

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BEIJING (Reuters) - China's housing inflation accelerated to its fastest pace in April in two years, driven by a jump in prices in Beijing and Shanghai, complicating the task of policymakers trying to cool the property sector while supporting economic expansion.

Average new home prices rose 4.9 percent last month from a year ago, after a year-on-year increase of 3.6 percent in March, according to Reuters calculations from data released by the National Bureau of Statistics(NBS) on Saturday.

The rise was the sharpest since April 2011.

Rising home prices have reignited concerns about property inflation, adding to pressure on policymakers who are struggling to curb house prices and still spur a strong economic recovery.

"The market expectations on rising home prices have not changed thoroughly and the property tightening campaign is still at a critical stage to strictly enforce (curbing measures)," Liu Jianwei, a senior statistician at the NBS, said in a statement.

Worried about a rebound in home prices, China's government unveiled a fresh round of measures in March to try to cool the sector, though those measures were less stringent than market expectations.

New home prices in Beijing rose 10.3 percent in April from a year earlier and Shanghai's prices were up 8.5 percent in April from a year ago. Both marked the fastest year-on-year gains since January 2011 when NBS changed the way it calculated data.

China's fight against property speculation has headed into its third year but many middle-class Chinese are still priced out of the urban housing market.


However, on a monthly basis, new home prices rose 1 percent in April, easing from March's gain of 1.2 percent, the NBS data showed, providing tentative signs that recent government moves to ward off property bubbles are biting.

Home prices rose month-on-month in 67 of 70 major cities monitored by the NBS in April, down from 68 in March.

The accelerating year-on-year home price gains were mainly caused by low bases last year as over 60 percent of 70 cities saw month-on-month price drops last April, said Liu.

China's home prices began their latest climb in mid-2012 when the central bank started expanding monetary easing as part of Beijing's growth-supporting policies.

"Going forward, we expect property sector policy to stabilize in the coming months and see a modest property recovery to continue," Tao Wang, an economist at UBS, said in a note to clients before the data was released.

"Meanwhile, the recent property tightening, including administrative price controls, may keep property prices from rising too rapidly in a few large cities," Wang added.

Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, only giving home price changes in each of 70 major cities.

(Reporting By Xiaoyi Shao and Michael Martina; Editing by Sanjeev Miglani)

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Comments (1)
MikeBarnett wrote:
China limits the number of housing units that one person may own to prevent excessive speculation that raises prices without increasing actual value. In 2011, it began construction of 46 million low cost housing units, enough for 138 million Chinese or 10% of its people, that should be complete by 2015. The full effects should begin to be felt by mid-2013 and continue until the end of 2015. However, China may need legal action to prevent abuses by local party leaders because corruption occurs in all countries.

Reuters should consider cities in the center, west, and north as China’s growth develops these areas per its 5-year plans from 2011 to 2020. Although the east and south will remain large with Beijing, Shanghai, and Guanzhou/Hong Kong remaining significant, China will have over 200 cities with 1 million or more people, including Chongqing with 30 million and climbing. China has 475 million people who will move from rural areas to cities, leaving about 200 million in rural agriculture.

May 18, 2013 3:06pm EDT  --  Report as abuse
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