China Home Prices Climb as Buyers Defy Government Curbs

China’s new home prices rose in all but two cities in April, with housing values accelerating in key centers including Beijing and Shanghai as buyers defied the government’s latest round of property measures.

Prices climbed in 68 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said in a statement today. The same number of cities posted gains in March, the most since September 2011.

Thirty-five provincial-level cities have issued details of property curbs by an April 1 deadline in response to the central government’s measures imposed in March. Only the capital city of Beijing issued the toughest measures, raising the down payment on second homes and strictly enforcing a 20 percent capital gains tax on existing homes, according to Centaline Property Agency Ltd., the country’s biggest real estate agency.

“Home prices continued to climb because the direct impact of the curbs is hitting on home sales, while it’ll take several more months to slow the prices,” said Lan Shen, a Shanghai-based economist at Standard Chartered Plc. “Policies haven’t been strictly enforced on the local level.”

The southern business city of Guangzhou recorded the biggest increase at 14 percent from a year earlier, and those in Beijing jumped 10 percent. Home prices in Shanghai climbed 8.5 percent, and all the cities that recorded gains had their biggest advances since the government changed its methodology for the data in January 2011.

Existing Homes

China switched from reporting one average price for the nation to those for 70 cities it tracked at the start of 2011.

The biggest decline in new home prices last month was in Wenzhou, where they fell 5.7 percent from a year earlier, according to the data.

Existing home prices rose 11 percent in Beijing last month from a year ago and those in Shanghai increased 8.5 percent, according to the data. They climbed 8.6 percent in Guangzhou and 7.3 percent in Shenzhen, both located in southern China near Hong Kong.

Private data have also shown price gains are accelerating. April home prices jumped 5.3 percent from a year earlier, the biggest increase since housing costs ended eight months of declines in December, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.

While China’s home prices continued to climb from a year ago, analysts including Mizuho Securities Asia Ltd.’s Alan Jin said the increases slowed from March.

Unrealistic Expectations

Home prices increased in 67 cities in April from a month ago, compared with 68 in March. Housing values in Beijing rose 1.4 percent in April from a month ago, compared with 2.1 percent in March, while those in Shanghai added 1.7 percent last month from 2.7 percent in March.

“It’ll be unrealistic to expect home prices to fall,” Hong Kong-based Jin said in a phone interview today. “As long as the rate is in line with income growth, it’s acceptable. It’s unlikely for the government to take more actions soon, especially as the typically low season of the property market in the summer approaches.”

Home sales transaction value fell 13 percent in April from the previous month as the new property curbs started to take effect, the statistics bureau reported on May 13.

“The latest round of the measures were announced in early March and we are really waiting to see the true impact,” Chris Brooke, chief executive officer for China at CBRE Group Inc., said in a Bloomberg Television interview in Beijing yesterday. “There’s beginning to be some impact of the latest measures, although it’s really a slow of the rate of the growth rather than controlling or reducing the actual prices.”

Moody’s Investors Service and Standard & Poor’s both said last week that the government curbs will slow down property sales growth this year.

— With assistance by Bonnie Cao

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