Thursday, October 20, 2011

China New Home Sales

Published October 19, 2011
China home prices rise in fewer than half its cities
Market correction has started following govt curbs, say analysts

(SHANGHAI) China's home prices gained in fewer than half of the 70 cities monitored by the government in September for a second month as sales eased following harsher policies to curb the risks of asset bubbles.

New home prices in the most affluent cities, including Beijing, Shanghai, Shenzhen and Guangzhou, were among 30 that were unchanged from August, the statistics bureau said on its website yesterday. A total of 16 cities posted month-on-month declines in housing values and 24 recorded gains.

'The correction in China's property market has already started,' Yao Wei, a Hong Kong-based economist at Societe Generale SA said. Home prices would need to fall between 5 per cent and 10 per cent before the government eases its curbs, she said.

The government increased downpayment requirements and mortgage rates on some homes this year and issued home purchase restrictions in about 40 cities.

Chongqing, one of the only two cities the government imposed property taxes in this year, posted the steepest decline as prices dropped 0.4 per cent from August, while Changsha, Kunming, Yinchuan and Luoyang had the largest gain of 0.3 per cent, the bureau's data showed.

Prices rose in 69 of the 70 cities from the same time last year, with the city of Wenzhou reporting the only decline, according to the data. China's Premier Wen Jiabao visited the city in eastern Zhejiang province this month amid reports of surging bankruptcies among private companies unable to repay debt to so-called underground lenders.

In August, 16 cities posted a decline in home prices and 31 were unchanged from July, the first time fewer than half of the locations recorded a gain, according to Samsung Securities.

China's biggest property companies reported mixed sales data last month. China Vanke Co, the country's largest listed developer, said September's sales dropped 12 per cent from a year earlier, and China Overseas Land & Investment posted an 18 per cent decline. Evergrande Real Estate Group, the country's second biggest by sales, said September sales surged 79 per cent.

China's property sales rose 23 per cent to 3.9 trillion yuan (S$775.5 billion) in the first nine months, while development investments gained 32 per cent in the period to 4.4 trillion yuan, according to government data yesterday.

China's property investment may be holding up due to social housing and delayed construction expenses, Nicole Wong, a Hong Kong-based analyst at CLSA Asia-Pacific Markets, said.

Luxury home developers are finding it harder to resist price reductions as banks in 14 cities including Shanghai and Guangzhou raise mortgage rates for first homes by as much as 50 per cent, Shanghai Securities News said yesterday.

The government's home price data may not fully reflect market trends because there are 'hidden price adjustments' to housing values, including incentives such as the absorption of interest by developers, Ms Wong said. -- Bloomberg


My Thots....

Whatever, the 'hidden price adjustments' may be, the data points to cooling...

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