China new home prices rise

The prices of new homes in China rose last month in 67 of the 70 cities monitored as developers held off on reducing how much they charged while studying the effects of policies aimed at controlling the property market. May new-home prices increased by more than 6 per cent from a year earlier in 19 cities, compared with 21 cities in April, according to data the National Bureau of Statistics posted to its website yesterday. Prices in northeastern China's Dandong rose 9.7 per cent in May, the most among the 70 cities monitored. China on June 14 ordered banks to hold more money as reserves for the sixth time in 2011 as it fights to contain inflation and curb home prices. Authorities said last month they will maintain curbs after intensifying measures this year with higher minimum down payments for second-homes and residential property taxes in Shanghai and Chongqing. Prices for existing homes fell in May from April in 23 cities, yesterday's data showed. "Developers are still watching to see how strict the government's property measures will be before cutting prices," said Shen Jian-guang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., in a phone interview. "The slowdown of existing home prices is showing the government's home purchase restrictions are having some effect." Price increases for new homes slowed last month in big cities such as the capital of Beijing, the statistics bureau said. Efforts to rein in property prices have been focused on the nation's largest urban areas. A total of 29 cities posted increases exceeding 5 per cent, down from 33 cities in April, according to the bureau's data. New-home prices in the capital of Beijing rose 2.1 per cent in May from a year earlier, while those in Shanghai climbed 1.4 per cent, the statistics bureau said. The biggest gains last month were in smaller cities, including Urumqi, Mudanjiang, Lanzhou and Qinhuangdao, which all posted increases of at least 7.7 per cent, according to the data. Compared with the previous month, new home prices fell in nine cities in May, the same number as in April. More cities posted falling prices for existing homes. In May, prices for existing homes fell from the previous month in 23 cities, compared with 16 in April, the bureau said. Existing home prices in Beijing fell 0.2 per cent from April while those in Shanghai increased 0.2 per cent. "The dynamics of prices this year will be much less aggressive than in the past," said Luca Silipo, chief Asia- Pacific economist at Natixis before yesterday's release. "If you look at the transaction volumes, the policies are working." Some developers such as China Vanke Co. and China Overseas Land & Investment Ltd. started to cut prices in some Chinese cities, and more may follow suit in the second half of this year, according to Credit Suisse Group AG. Chinese developers' outlook was cut to "negative" from "stable" by Standard & Poor's on June 15 on concern tighter credit and further government curbs may lead to rating downgrades in the next year. Property sales may start to slow as the government's policy "starts to bite," leading to price cuts that may drive home prices 10 per cent lower in the next 12 months, the credit rating company said. From / Gulf News