China Home Prices Rise in Fewer Cities as Market Stabilized

China’s September new home prices rose in fewer than half the cities monitored by the government from a month earlier, indicating property curbs are stabilizing the market.

Prices climbed in 31 cities of the 70 the government tracks from the previous month, compared with 35 cities in August, according to data released by the statistics bureau today. Prices fell in 22 cities, the data showed.

“We had expected house prices to stabilize for the rest of the year: no collapse, no rebound,” Zhu Haibin, the chief China economist at JPMorgan Chase & Co. in Hong Kong, wrote in an e- mailed reply to queries. “Today’s data shows our forecast is on track. It suggests that the housing market is bottoming out.”

China’s property curbs have showed “preliminary effects,” though the market is still “unstable,” the official Xinhua News Agency said yesterday, citing Premier Wen Jiabao’s comments in meetings he held with industry leaders, company executives and some local government officials on Oct. 12-15. The government should stick to the property policies, he said.

The southern cities of Guangzhou and Shaoguan led gains in September, with a 0.4 percent increase each from August, according to today’s data. Major cities Beijing and Shanghai recorded gains of as much as 0.1 percent. Home prices were unchanged in 17 cities.

Home prices rose in 12 cities from a year earlier, compared with 15 cities in August.

China’s property market in general is “stable,” said the statistics bureau spokesman Sheng Laiyun at a news conference in Beijing today.

Shares Climb

A measure tracking property stocks on the Shanghai Composite Index (SHCOMP) climbed 3.5 percent at the close, the most in more than three months.

The housing data today “is positive, because it shows home prices have not been rebounding greatly,” Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc., said in a phone interview today. “The government has no necessity to issue new tightening policies, dispelling market worries. China’s property market is in a controllable status.”

In its more than two-year effort to curb the property market, China has raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, increased building of low-cost social housing, and placed home purchase restrictions in about 40 cities.

Existing Homes

Shanghai will continue to increase checks on the implementation of home purchase restrictions, China Securities Journal reported today, citing Liu Haisheng, director of the city’s housing support and building administration bureau.

Existing home prices in Beijing rose 0.1 percent last month from a month ago, and increased by 0.2 percent in Shanghai.

Private data has also showed the housing market is stabilizing. Home prices gained 0.17 percent in September, advancing for a fourth month, SouFun Holdings Ltd. (SFUN), the nation’s biggest real-estate website owner, said this month.

“We certainly don’t want a bubble, so we want to stabilize the real estate prices,” Yi Gang, central bank deputy governor, said at an International Monetary Fund event in Tokyo on Oct. 14. “It is a very delicate situation. We want to do this carefully, so we don’t have a sudden dramatic thing happening. The key word is to maintain stability.”

Housing Sales

China’s economic growth slowed for a seventh quarter, expanding 7.4 percent in the third quarter, according to the government today. That matched the median estimate in a Bloomberg News survey of 43 economists and compares with a previously reported 7.6 percent expansion in the second quarter.

China’s housing sales rose 3.3 percent to 3.4 trillion yuan ($544 billion) in the first three quarters, while investment in homes, office buildings, malls and other real estate gained 15 percent to 5.1 trillion yuan.

Chinese developers’ credit outlook improved as a recovery in prices eased liquidity pressures and a slowing economy limited authorities’ incentive to further tighten policy, Standard & Poor’s said in a Sept. 18 report. About 27 developers have announced sales for the first three quarters, achieving 80 percent of their full-year target, according to an Oct. 16 report of Macquarie Capital Securities.

“Developers have more money to spend, but they are still not out of the woods,” James MacDonald, head of China research for Savills Property Services (Shanghai) Co., said before today’s data. “A lot of developers still have quite a lot of capital tied up in terms of stock. It hasn’t been a significant rebound in terms of demand from the land market.”

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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