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China Home Prices Rise Most in 6 Months, SouFun Says

China's January Home Prices Rise Most in 6 Months
Residential highrise buildings in Shanghai. Photographer: Kevin Lee/Bloomberg

Feb. 1 (Bloomberg) -- China’s January home prices rose 1 percent, the biggest month-on-month gain in six months, according to SouFun Holdings Ltd., as homebuyers defied the government’s property curbs.

Residential prices in all 100 cities tracked by SouFun climbed from December, with average values increasing to 8,645 yuan ($1,312) a square meter. The gain followed a 0.9 percent advance in December’s home prices, the nation’s biggest property website owner said in an e-mailed statement today.

China last week raised the minimum down payment for second-home purchases, told local governments to set price targets on new properties and introduced taxes for residential properties in Shanghai and Chongqing. The curbs followed two interest rate increases in the past four months and a ban on third mortgages.

“The market hasn’t really responded to the government’s policies yet,” said Sylvia Wong, a Hong Kong-based property analyst for UOB Kay Hian Ltd. “Let’s focus on February’s data to see if the strong government curbs really work.”

Changzhou, a mid-sized city in eastern China, posted a 2.6 percent gain from December, the biggest advance in the country, SouFun said. Prices in Guangzhou, the nation’s southern business hub, climbed 2.5 percent. They rose 1.6 percent in Chongqing and 0.7 percent in Shanghai, it said.

SouFun started compiling the monthly home data of 100 cities in July last year and usually releases them before the national statistics bureau’s figures. The government’s housing data for January is scheduled to be released in mid-February.

Rising Home Prices

China’s home prices gained for 19th month in December, rising 6.4 percent from a year earlier, the statistics bureau said last month.

Sales volume slumped in 23 of the 30 cities that SouFun monitors, with 15 of them declining by more than 20 percent in January from December, according to a separate report released by SouFun over the weekend.

China International Capital Corp. cut its 2011 forecast for the nation’s property transaction volume after the government’s curbs. Transaction volumes are expected to drop 10 percent from a year earlier to 940 million square meters in 2011, compared with an earlier estimate for a 5 percent increase, analyst Bai Hongwei wrote in a report dated yesterday. New lending to developers and mortgage loans may both fall about 30 percent in 2011, according to the report.

The measure tracking property stocks on the Shanghai Composite Index lost 0.7 percent as of 1:22 p.m., the most among five industry group on the benchmark gauge.

China’s property market may be heading into a bubble as the economy’s reliance on real estate reaches a level close to the housing peaks in the U.S. and Japan, according to Citigroup Inc.

China’s property prices will fluctuate within a 10 percent range this year, said Shen Minggao, Citigroup’s China research head, adding that the country “may only avoid the bubble burst if current property tightening is effective.”

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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