Property

China Rising Home Prices Jan 2013

China Rising Home Prices Jan 2013Home prices remained on upward trends in the first month of 2013. A total of 54 cities, out of 70, saw prices of newly-built homes increased on a monthly basis in January, according to data released by the National Bureau of Statistics. On average, new home prices across the country grew by 0.5% over the month, and was 0.6% higher compared with the same period a year ago.

First-tier cities continued to lead price hike in January with a 1.9% m-o-m growth, compared with 0.7% and 0.3% growths in second and third-tier cities. Among which, new home prices in Beijing rose 2.1% m-o-m in January, to RMB 14,188 per sq meter, while that in Guangzhou rose 2% compared with December’s level, to RMB 14,216 per square meter. Shenzhen finished the month with the biggest gain among first-tier cities, posting a 2.2% m-o-m growth. Prices in Shanghai also recorded a 1.3% monthly increment to RMB 11,613 per square meter.

The recent upsurge in home prices, however, is expected to put more pressure on the Chinese Government to release further tightening policies in the near future. In fact, Chinese Premier Wen Jiabao in a State Council meeting in late-February unveiled “The New Five Guidelines” to restate the Government’s determination to rein in unsustainably-high home prices. According to the statement, cities where home prices soared “excessively fast” should promptly impose necessary curbing measures. Provincial capitals and cities which directly reported to Beijing will also have to publish annual price control targets to keep home prices stable. Other guidelines include boosting land supply for low-end and social housing, curbing speculative purchases in the property market, accelerating construction of social housing and strengthening market supervision.

Nonetheless, the actual impacts of these guidelines on the property market will not be felt in the short-term as we expect home sales in February will slow down due to the long Lunar New Year vacations. Cautious homebuyers may hold back their purchases plans until local governments release their follow-up policies in March or April, the earliest.