The National Bureau of Statistics (NBS) said 68 out of 70 tracked cities reported higher prices for new homes in January from a year earlier but the market is likely to slow down, analysts said.

Ten out of the 70 surveyed cities saw prices rise by more than 10 percent, the NBS said on its website on Friday.

While the momentum for rising prices in big cities such as Beijing and Shanghai slowed, that was not the case for smaller and inland cities.

According to the NBS, prices for new properties in Beijing increased by 6.8 percent in January from a year ago, and by 1.5 percent in Shanghai. Existing home prices in Beijing climbed 2.6 percent last month, and in Shanghai by 1.7 percent.

The resort city of Sanya on Hainan island recorded the highest growth at 19 percent year-on-year. Other cities that recorded high price-growth rates included Shijiazhuang in Hebei province, Lanzhou in Gansu province and Yueyang in Hunan province.

However, with the government introducing measures to rein in the property market and tightening credit for developers, the momentum driving price increases will slow, analysts said.

Wang Ying, an analyst from Fitch Ratings Ltd in Beijing, expected property prices to continue to increase this year, but at a slower rate than in 2010.

The January statistics were the first after the NBS adopted different methods to track the property market to more accurately reflect price gains.

The NBS used online registration data for property transactions for 35 of the tracked cities. For cities that don’t have online registration systems, the NBS continues to use figures from local authorities.

The NBS had been challenged over its accuracy. Its figures for 2006-2009 showed prices only increased by 50 percent, but private agencies said they rose by at least 100 percent.

The government has launched a series of measures to crack down on property speculation.

On Jan 26, the State Council introduced eight measures to curb rising prices, including increasing the supply of affordable apartments to earners in the low-income bracket, restrictions on multiple purchases and higher transaction taxes.

The Beijing municipal government released property rules for the capital on Wednesday, prohibiting new home purchases by families who own two or more apartments and non-Beijing registered families who own at least one apartment.

Property taxes were also introduced in Shanghai and Chongqing.

The volume of trading is likely to decline by 30 percent in Beijing this year, said Zhang Dawei, a senior analyst from the Beijing-based Centaline Property Agency Ltd.

Pan Shiyi, chairman of developer SOHO China, said the government’s policies to restrict home purchases are more likely to influence housing prices than monetary policy.

Wang, the analyst from Fitch Ratings, said that sales will decline year-on-year in the first quarter as buyers remain cautious, but prices will remain high because currently "most big Chinese property developers, especially those listed overseas, have sufficient funds" and consequently will not be under financial pressure to sell quickly.

Medium-sized and large developers issued offshore debts in 2010, which reduced the impact from tightened bank-lending policies, said Wang.

SOURCE: China Daily

 

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