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China Home Prices Advance as Guangzhou, Shenzhen Jump 20%

China Residential Properties
A man enters a real estate agent's office with residential properties advertised in its window in the Haizhu district of Guangzhou, Guangdong Province, China. Photographer: Brent Lewin/Bloomberg

New-home prices in China’s cities defined by the government as first tier rose more than 15 percent last month, led by Guangzhou and Shenzhen in the south, as local property curbs failed to deter buyers.

Prices climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing. They increased in 69 of the 70 cities tracked by the government, the National Bureau of Statistics said in a statement today.

At least 10 Chinese cities, many of them provincial capitals, have tightened local property policies since November, with the major cities of Shenzhen, Shanghai and Guangzhou all raising minimum down payments for second homes to 70 percent from 60 percent. Premier Li Keqiang has held off introducing more nationwide policies to cool the real estate market since he took office in March.

“China’s big cities will certainly implement the tightening measures more strictly this year,” said Alan Jin, Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “China still cares about the fast-rising home prices, otherwise those local curbs wouldn’t have come out. They don’t seem to find better ways to tackle the problem.”

‘Near Despair’

Existing-home prices rose 20 percent in the capital Beijing last month from a year earlier and increased 14 percent in Shanghai, according to today’s data.

Private data also showed there’s no sign of cooling in the property market. Home prices in December had the biggest year-on-year gain in 2013, gaining 12 percent, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.

Beijing, the financial center of Shanghai, and the southern business hubs of Guangzhou and Shenzhen are considered first-tier cities by the bureau of statistics. The four “are characterized by high levels of international business connectivity, deep corporate bases and well-developed international grade stock, and they are the country’s most liquid and transparent markets,” according to broker Jones Lang LaSalle Inc.

First-tier cities, including Beijing and Shanghai, may impose further curbs if prices rise too fast, Standard & Poor’s Hong Kong-based analyst Bei Fu said on a conference call yesterday.

Almost one-fifth of respondents in a Renmin University of China survey gave a zero score to the government’s property policies, indicating “near despair” with housing prices, the official China News Service reported last month, citing survey results.

Home prices will rise about 5 percent this year from 2013, while home sales volume will jump about 10 percent, according to S&P.

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