China Home Prices Rise in Most Cities Since April 2011

China’s new home prices rose in December in the most cities in 20 months, renewing concerns that the government may issue new tightening measures.

Prices climbed in 54 of the 70 cities the government tracks, compared with 53 in November, according to data from the statistics bureau today. Prices fell in eight cities, the data showed. In April 2011, prices increased in 56 cities.

China should “gradually” set up a property tax system that covers real estate transactions and ownership, Premier Wen Jiabao said during a visit to the finance ministry this week. The government will stick to home-purchase restrictions and will “strictly” curb speculative housing demand in 2013, the official Xinhua News Agency reported last month, citing the Ministry of Housing and Urban-Rural Development.

“If prices continue to rise and more rapidly in the next few months, there is a danger that the government could be more worried and start to tighten again,” Wang Tao, chief China economist at UBS AG, said in a Bloomberg Television interview in Hong Kong today. “But it’s a little bit too early to say the market is already overheating.”

The southern business hub of Guangzhou led gains in December with a 1.2 percent increase from November, according to today’s data. Among major cities, prices in Beijing and Shanghai gained 0.8 percent and 0.6 percent respectively.

‘Next Stage’

The Shanghai Stock Exchange Property Index, a measure of developers’ shares on the benchmark Shanghai Composite Index, rose 3.1 percent at close of trading. The gauge gained 37 percent in the last 12 months, outstripping the 2.2 percent advance in the benchmark.

China’s housing sales rose 11 percent to 5.4 trillion yuan ($869 billion) last year from 2011, while investment in homes, office buildings, malls and other real estate gained 16 percent to 7.2 trillion yuan, a separate government report today showed.

Home prices were unchanged in eight cities. They increased in 40 cities from a year earlier, compared with 25 cities in November, the home data showed.

“The recovery of the property market has already started because of eased liquidity,” said Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. “The government should prevent prices from rising too fast in the next stage.”

Existing home prices rose 1 percent in Beijing last month from November and increased 0.4 percent in Shanghai, today’s data showed.

‘Right Direction’

In its almost three-year effort to tighten the property market, the government has raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, and enacted home-purchase restrictions in about 40 cities.

The market “is moving into a right direction: Prices are going back up and the government is still sitting on it, which I think is just the right thing to do,” Ronnie Chan, Chairman of Hang Lung Properties Ltd., the Hong Kong developer that’s investing $8.5 billion on the mainland, said in an interview on Bloomberg Television this week.

Private data also has shown the housing market is recovering. Home prices rose for a seventh month in December, by 0.23 percent, from a month earlier, according to SouFun Holdings Ltd., the country’s biggest real estate website owner.

China Vanke Co., the country’s biggest developer by market value, said last week that sales in 2012 rose to an industry record high of 141.2 billion yuan. Evergrande Real Estate Group Ltd. is targeting sales of 100 billion yuan this year, 25 percent higher than the target in 2012, it announced in a stock exchange statement this week.

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