China’s new home prices jumped in May by the most since they reversed declines in December, as the government’s efforts to tighten property curbs this year fail to deter buyers.
Prices surged 6.9 percent from a year earlier to 10,180 yuan ($1,659) per square meter (10.76 square feet), SouFun Holdings Ltd., the country’s biggest real estate website owner, said in a statement today after a survey of 100 cities. The costs rose 0.81 percent from April, the 12th month of gains on a month-on-month basis.
China will widen property tax trials, which have only been imposed in Shanghai and Chongqing, the State Council said in a statement posted on the central government’s website on May 24. The government stepped up a three-year campaign to cool home prices in March, with only the capital city of Beijing issuing the toughest measures among 35 provincial-level cities, according to Centaline Property Agency Ltd., the country’s biggest real estate agency.
“Against the backdrop of rising land prices, supply shortages in key cities and expectations of looser monetary policy, the expectations for further home-price gains going forward remain relatively strong,” SouFun said in the statement.
The average price in the 10 biggest cities, including Beijing and Shanghai, jumped 9.7 percent from a year earlier to 17,202 yuan per square meter, up 1.1 percent from April, SouFun said.
Guangzhou and Shenzhen in the southern province of Guangdong are rejecting some projects seen as too expensive, according to CEBM Group, an advisory company. Beijing will probably cap home prices on a “large scale” in the second half of the year, 21st Century Business Herald reported May 30, without citing anyone.
A gauge tracking property shares listed in Shanghai rose 0.3 percent at the close of trading, compared with a 0.1 percent drop in the benchmark Shanghai Composite Index. China Vanke Co., the nation’s biggest developer, added 0.2 percent to 12 yuan in Shenzhen trading.
“While home prices may keep rising, the possibility of an acceleration in gains is limited,” Zhao Zhenyi, a Shanghai-based property analyst at Industrial Securities Co., said by phone, citing an expected inventory recovery in major cities. “We don’t think the price changes will trigger more strict price controls, and that should be neutral tilted toward positive for the industry.”
The month-on-month increase in May was 0.19 percentage point slower than in April, a second consecutive month of narrowing, according to SouFun.