Sunday 18 March 2018

China's new property sales surge 27pc to break $1trn

Luohu district of Shenzhen is among Chinese cities experiencing a property boom
Luohu district of Shenzhen is among Chinese cities experiencing a property boom

Bonnie Cao

CHINA'S new home sales last year exceeded $1 trillion (€737bn) for the first time as property prices in cities the government considers first tier surged in the absence of more nationwide property curbs.

The value of new homes sold in 2013 rose 27pc from 2012 to 6.8 trillion yuan, or $1 trillion (€811bn), National Bureau of Statistics said in a statement.

New-home prices in December climbed a fifth in Guangzhou and Shenzhen from a year earlier, and jumped 18pc in Shanghai and 16pc in Beijing, the bureau of statistics said.

"Clearly, the real estate market in China remains hot," said Dariusz Kowalczyk, a senior economist and strategist at Credit Agricole CIB. "Urbanisation and investment demand are leading to rising sales volumes, while prices continue to gain. China's growth remains heavily dependent on the real estate market."

Premier Li Keqiang hasn't imposed additional nationwide measures to cool the market since his predecessor Wen Jiabao stepped up a three-year campaign in March, ordering higher down payments and interest rates for second-home loans in cities with "excessive fast" price gains. Instead, Li has left it up to individual cities to impose their own curbs, with at least 10, many of them provincial capitals, tightening local property policies since November.

Shenzhen, Shanghai and Guangzhou have all raised minimum down payments for second homes to 70pc since November.

"The effect of those measures was limited last year because in first-tier cities demand still outpaced supply," said Ding Shuang, a Hong Kong-based senior China economist with Citigroup.

The value of new housing sales was 5.4 trillion yuan in 2012, an 11pc gain from the previous year, according to the government data. China's economy rose 7.7pc last year from 2012, the government said, matching analyst expectations.

Investment in homes, office buildings, malls and other real estate gained 20pc to 8.6 trillion yuan last year from a year earlier, according to the statistics bureau data. New property construction rose 14pc to two billion sqm.

New-home sales volume rose 18pc to 1.2 billion sqm, the government data showed.

New and existing home sales in the US were about $1.1 trillion (€810bn) last year, including $149bn of new homes sold, broker Cushman & Wakefield estimated.

China's existing-homes market is about one-third of new homes by sales, according to Centaline Property, because the nation only allowed private home ownership in 1998.

The government doesn't release data on existing-home sales. Existing-home prices rose about a fifth in the capital Beijing last month from a year earlier and increased 14pc in Shanghai.

Private figures also showed no sign of cooling in the property market. Home prices in December had the biggest year- on-year gain, increasing 12pc.


"There has been a misconception that China's property curbs are aimed at cracking down on the market or squeezing sales," said David Hong, a Hong Kong-based property analyst at China Real Estate Information Corp, a property data and consulting firm. "The country's economy, especially that of less affluent cities, is relying on the real estate industry."

First-tier cities, including Beijing and Shanghai, may impose further curbs if prices rise too fast, Standard & Poor's Hong Kong-based analyst Bei Fu said a week ago. Home prices will increase about 5pc this year from 2013, while home sales volume will jump about 10pc, according to S&P.

Almost one-fifth of respondents in a Renmin University of China survey gave a zero score to the government's property policies, indicating "near despair" with housing prices, the official China News Service reported last month.

New-home prices in the eastern city of Wenzhou in Zhejiang province fell 2.6pc from a year earlier, declining for a 27th month. It was the only city among the 70 to show a decrease, the government data showed. (Bloomberg)

Irish Independent

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