China Home Prices Rose in November as Shenzhen Led Gains

New home prices in the four Chinese cities defined as first-tier by the government rose, with Shenzhen posting the biggest gain in almost three years, as property measures by local governments failed to deter buyers.

Shenzhen and Guangzhou posted increases of 21 percent from a year earlier, while prices climbed 18 percent in Shanghai and 16 percent in Beijing, data from the National Bureau of Statistics showed today. Prices rose from a year earlier in 69 of 70 cities tracked by the government last month, it showed.

China has held off from introducing more nationwide policies to rein in the property market, opting for measures implemented by local authorities instead that have included higher down-payment requirements for second-home purchases in three of the first-tier cities. A statement issued after this month’s annual Central Economic Work conference also didn’t mention real estate curbs as a policy initiative for next year.

“Home prices in major cities have already become unaffordable; the impact of the local-level property measures is not very strong, we’ve seen similar policies before,” Yao Wei, China economist at Societe Generale SA in Hong Kong, said by phone today. “The central government is treating cities differently, but they will still take nationwide actions if home prices are rising too quickly.”

The pace of increases from last year were the same in November from October in all four cities except for Shenzhen, according to the data.

First-tier Cities

The capital Beijing, the financial center of Shanghai, and the southern business hubs of Guangzhou and Shenzhen, are considered first tier 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.

The Shanghai Stock Exchange Property Index fell 0.2 percent as of 1:18 p.m. local time, while the benchmark was little changed.

Existing home prices rose 20 percent in Beijing last month from a year earlier, while they increased 14 percent in Shanghai, advanced 15 percent in Shenzhen and added 12 percent in Guangzhou, according to the data.

China’s leadership has changed its policy mindset from curbing demand to a more long-term focus on regulating the property market, as the government plans to separate the affordable housing and the private property market, Citigroup Inc. analysts led by Oscar Choi wrote in a report last week.

Policy Objectives

“The data runs contrary to policy objectives and is likely to trigger a fresh round of real estate market curbs,” Hong Kong-based Dariusz Kowalczyk, an economist and strategist at Credit Agricole CIB, wrote in an e-mailed reply. “We expect higher down-payment ratios in the every near term and a hike in mortgage lending rates in coming months.”

Private data also have shown rising housing values. Home prices jumped 9.5 percent from a year earlier last month, the biggest gain since December last year, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.

The value of November home sales climbed to the highest in almost two years, to 720.4 billion yuan ($119 billion), the statistics bureau said last week.

China’s home-price growth in the third quarter was the fastest after Dubai, rising 22 percent from a year earlier, broker Knight Frank LLP said in a report this month that tracked 55 markets.

Major cities will see more price increases next year on a supply shortage, while less affluent second-tier cities will have “relatively stable” prices, said Liu Ning, board secretary of China Merchants Property Development Ltd., the country’s third-biggest developer by market value, in an interview on Dec. 13.

— With assistance by Bonnie Cao

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