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Beijing to Stabilize New Home Prices Like Other Cities
(Corrects third paragraph of story published March 30 to say prices rose in 68 of the 70 cities.)
Beijing said it wants to keep new home prices steady or declining this year, joining other Chinese cities in responding to central government measures to keep housing gains in check.
Beijing said it will stabilize new home prices this year and aims for a drop from 2010, the local government announced on its website late yesterday. Shanghai said on March 28 it will limit gains in new home prices to no more than the pace of economic growth and average income expansion.
About 40 Chinese cities said they will cap new home prices below annual economic and disposable per-capita income growth after local governments were ordered to submit home price control targets by the end of March. The Chinese government is intensifying efforts to keep housing affordable after prices gained for 19 consecutive months to December and climbed in 68 of 70 cities the government monitors in February.
“The capital city of Beijing’s property curbs always are the most severe among peers,” said Jeffrey Gao, a Shanghai- based property analyst at Royal Bank of Scotland Group Plc. “But even that target was almost like nothing.”
A gauge tracking property stocks on the Shanghai Composite Index lost 1.4 percent at the close, the most among five industry groups on the benchmark measure.
Resolute Measures
Premier Wen Jiabao said on March 5 that China will “resolutely” press ahead with controls on the property market to curb speculation, reiterating a promise to keep housing affordable. The government will “severely punish” irregularities in the real-estate market, implement differentiated credit and tax policies, and hold local officials accountable for maintaining stable home prices, he said.
Home prices in Beijing rose 28 percent in December from 2009, while Shanghai jumped 26 percent, according to Soufun Holdings Ltd.
The southern cities of Shenzhen and Guangzhou won’t allow new-home prices to increase at a pace that exceeds growth for the local economies and average disposable incomes this year, the 21st Century Business Herald reported today, citing statements from the local governments.
Shenzhen’s home price growth may be within 10 percent and Guangzhou’s home price growth may be within 11 percent, according to the newspaper’s calculation.
The local governments’ limits only target new homes, which may include low-cost housing, and push up prices of homes in the secondary market, said RBS’s Gao.
Government Curbs
China raised the minimum down payment for second-home purchases this year and levied taxes on residences in Shanghai and Chongqing. Beijing and Guangzhou imposed restrictions on housing purchases last month.
Among the cities that announced targets, most connected home prices with the cities’ economic and income growth. Shanghai forecast in January that the city’s economy will expand 8 percent in 2011. It grew 9.9 percent last year from 2009, while average incomes jumped 10.4 percent.
The northwestern city of Xi’an said home prices will be capped at 15 percent this year; the western city of Lanzhou set a 9 percent ceiling, while the northeastern industrial city of Shenyang set a target of 12 percent, below economic growth and in line with the average income growth, according to local government websites.
Evergrande Real Estate Group Ltd. (3333), China’s second-biggest developer by sales volume, plans a 39 percent increase in contracted sales this year to 70 billion yuan, it said yesterday.
China’s smaller cities led gains in home prices last month with new home prices in the center of Yueyang surging 12 percent from a year earlier, the most among 70 cities monitored by the government. They jumped 11 percent in the western city of Lanzhou. Prices in Beijing climbed 6.8 percent and they rose 2.3 percent in Shanghai, lower than more than 80 percent of the cities tracked, the data showed.
--Bonnie Cao. Editors: Andreea Papuc, Malcolm Scott
To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at +86-21-6104-3035 or bcao4@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
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