Nov. 10 (Bloomberg) -- China’s house prices jumped the most in 14 months in October, adding to concern that record lending may create asset bubbles in the world’s fastest-growing major economy.

Prices in 70 major cities rose 3.9 percent from a year earlier, the statistics bureau said on its Web site today.

China’s central bank and banking regulator may “soon” issue measures to limit the use of debt in real-estate purchases to rein in price gains, a Shanghai official said yesterday. Asian economies from Hong Kong to Singapore are fighting rising property values, which threaten to mimic the U.S. mortgage bubble that roiled the world economy.

“Prices are gaining too fast, especially in first-tier cities such as Beijing, Shenzhen, Guangzhou and Shanghai,” said Lu Ting, an economist at Bank of America-Merrill Lynch in Hong Kong. “The government should tighten rules for second home purchases to stem speculation and curb the rapid price increases.”

Shanghai’s index of property stocks climbed 0.7 percent as of 11:30 a.m. local time, led by Shanghai Industrial Development Co., after more than doubling this year. The Shanghai Composite Index rose 0.3 percent.

In China, $1.27 trillion of new loans this year and inflows of cash from investors betting that the yuan will appreciate threaten to inflate bubbles. The statistics bureau reported month-on-month house price gains for 65 of the 70 cities in October.

Reducing Risks

Regulators may soon reduce “leverage ratios,” Fang Xinghai, the director-general of Shanghai’s financial services office, said at a forum in Beijing yesterday.

At the same time, he played down the dangers of a property bubble. Requirements of 30 percent down payments for mortgages for first homes and 40 percent payments, plus higher rates of interest, for second homes, already limit risks, he said.

“If there is some kind of collapse in the real-estate market going forward, the impact on the financial system is going to be very minimal,” the official added.

Chinese homebuyers don’t have the “excessive” borrowings that can lead to property bubbles, Li Wei, an economist at Standard Chartered Bank Plc in Shanghai, said today.

In Shanghai, apartment prices still lag behind those in financial centers elsewhere. The city is the 66th most expensive for residential real estate, Global Property Guide reported in February, citing a purchase price of $2,918 per square meter for a 120 square meter apartment.

Most Expensive Cities

Monaco, Moscow, London, Tokyo and Hong Kong took the top five places. New York was No. 6 at $14,898 per square meter. Beijing was No. 77.

Singapore’s central bank said yesterday that it may be necessary to implement more measures to counter real- estate speculation. The island nation has barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments that are still being built.

In Hong Kong, where a 28 percent jump in home prices this year has sparked a public outcry, Financial Secretary John Tsang said Nov. 4 the government was “very concerned” about the “sharp” rise.

In the latest Chinese data, price increases were led by Guangzhou in the south and Nanjing in the east, the statistics bureau said. Property sales by value jumped 79.2 percent in the first 10 months of the year to 3.15 trillion yuan ($460 billion). By floor area, sales rose 48.4 percent.

China’s banking regulator plans to review debt levels at some developers on concern that borrowings are fueling excessive gains in property prices, a person familiar with the matter said last month.

Investment in property development rose 18.9 percent in the first 10 months of 2009 from a year earlier, the statistics bureau said. That was an acceleration from 17.7 percent for the nine months through September.

--Li Yanping, Marco Babic. Editors: Paul Panckhurst, Chris Anstey.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

Last Updated: November 9, 2009 23:08 EST