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China’s Home Prices to Rise 5% to 7%, Jones Lang Says

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Jan. 6 (Bloomberg) -- China’s home prices will rise 5 percent to 7 percent in 2011 as the government’s housing policy will remain “tight” amid efforts to contain an asset bubble in an expanding economy, according to Jones Lang LaSalle Inc.

A property tax expected to be introduced in Shanghai this year will have a minimal impact because the levy will be low, said Michael Klibaner, head of China research at the world’s second-biggest publicly traded commercial-property broker. The Century Weekly magazine this week reported that the tax may be delayed following disputes among government departments.

“China’s home prices will remain stable in 2011 and the gain will be less than household disposable income,” Klibaner said in an interview in Shanghai. “The economy will remain relatively strong in 2011, and that will be the same reason for the pressure on real estate.”

China’s property prices climbed for an 18th month in November even after government measures including suspending mortgages for third-home purchases and a pledge to speed up trials for property taxes. In October, the People’s Bank of China increased interest rates for the first time in three years and raised borrowing costs for a second time on Dec. 25.

Beijing’s home prices jumped 37.1 percent last year, while those in Shanghai rose 13.4 percent, SouFun Holdings Ltd., China’s biggest real estate-website owner, said in an e-mailed report today. Seven among 15 major cities it monitors posted gains of more than 30 percent. The eastern city of Hangzhou surged the most, advancing 47.1 percent.

Property Tax

The statistics bureau is expected to release the home price data for December as early as next week. China, which initiated real-estate taxes in October 1986 while exempting non-commercial properties, may extend the levy to individuals for the first time, Century Weekly said this week.

Premier Wen Jiabao said in a National Radio broadcast on Dec. 26 that measures to curb the country’s property market weren’t well implemented and reiterated his goal for home prices to return to a “reasonable level” during his term, which ends in 2012.

An expected increase in housing supply in 2011 won’t be enough to meet the demand in the country, Klibaner said.

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