Chinese developers rose by the most in a month in Shanghai trading on optimism the government won’t introduce further property curbs following comments from officials on the country’s urbanization.
A gauge tracking Shanghai-traded developers jumped 3 percent at the close of trading, completing its biggest gain since Nov. 1. Gemdale Corp. (600383) advanced 5.2 percent to 5.29 yuan while Beijing Capital Development Co. climbed 3.5 percent to 10.13 yuan. The benchmark Shanghai Composite (SHCOMP) Index gained 0.9 percent after four days of losses.
Concerns about further tightening eased after President Hu Jintao’s speech at a party congress this month outlining a vision for the next decade placed little emphasis on the real estate market, according to CEBM Group Ltd. Vice Premier Li Keqiang’s comments this week on the nation’s urbanization added to investor interest.
“People have the straightforward idea that urbanization means new urban residents and that would bring new demand for homes,” said Luo Yu, a Shanghai-based analyst at CEBM Group, an advisory company. “Investors are chasing property stocks as there are few bright spots in other industries at the moment.”
The Shanghai Composite has fallen 10 percent this year as the nation’s economy slowed for seven quarters.
China’s urbanization has great potential in coming decades and the nation is willing to start a joint research with the World Bank Group on the issue, Li said in a meeting with the lender’s President Jim Yong Kim, Xinhua News Agency reported yesterday. Li is expected to replace Wen Jiabao as China’s new premier in March.
In his Nov. 8 speech at the start of a Communist Party Congress where Xi Jinping took over as the general secretary, President Hu said China must double per-capita income by 2020. That would mean home prices will more than double over the same period, according to CEBM’s Luo.
China’s new-home prices climbed in 35 of the 70 cities the government tracks in October, compared with 31 in September, according to data from the statistics bureau released Nov. 18. The central bank cut interest rates this year to help stem an economic slowdown and lenders offered discounts on mortgage rates to help first-home buyers.
In its more than two-year effort to curb the property market, the central government 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.
--Zhang Dingmin. Editors: Tomoko Yamazaki, Malcolm Scott
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