China Property

Home prices rise steadily in major mainland cities

Cost of new homes rose in 53 of 70 cities in November with the biggest rise in Tianjin; while in Hangzhou, Harbin and Ningbo, numbers slid

PUBLISHED : Wednesday, 19 December, 2012, 12:00am
UPDATED : Wednesday, 19 December, 2012, 2:37am

Home prices in major mainland cities rose steadily last month on improved demand, with analysts expecting the recovery to continue next year.

Prices of new homes rose in 53 of the 70 mainland cities surveyed last month, compared with 35 cities in October and 31 in September, according to data from the National Bureau of Statistics. November's figure was the highest in 18 months.

Prices in seven cities stayed flat while they fell in 10 cities last month. Prices fell in 17 cities in October. For a year-on-year comparison, prices were down in 19 cities in November last year.

The highest average price increase for any city was less than 1 per cent last month, compared with 0.5 per cent in October.

"Despite a tough year of policy controls, the Chinese property sector has been doing fairly well this year," said Alan Jin, an analyst at Mizuho Securities.

The biggest rise in prices of new homes was seen in Tianjin, with a 0.9 per cent increase from October, according to the government data.

For Beijing, the month-on-month rise was 0.8 per cent, while it was 0.6 per cent in Chongqing, Kunming, Guangzhou and Shenzhen.

In Hangzhou, Harbin and Ningbo, prices slid between 0.1 and 0.2 per cent.

Second-hand home prices rose 0.8 per cent in Beijing last month from October and 0.2 per cent in Shanghai.

Home sales on the mainland in November climbed 18 per cent in terms of value to 595.8 billion yuan from the previous month.

Housing starts fell 7.2 per cent in the first 11 months compared with the same period last year to 1.62 billion square metres, according to bureau data.

"The tight policy in place is showing signs of what the government has been trying to achieve in the last decade but has repeatedly failed - a consolidation of the sector," Jin said.

"Looking ahead into 2013, we expect the current recovery to be maintained, with the speed picking up."

According to Jin, the policy risk in the coming year is a tightening of the housing policy rather than easing if prices gain momentum in the second half. Home prices in first-tier cities such as Beijing and Shanghai would see bigger rises than elsewhere, he added.

Tao Dong, an economist at Credit Suisse, also expects the property market to pick up next year, including in the second- and third-tier cities.

Shares of mainland developers, however, fell yesterday, with China Overseas Land & Investment sliding 1.92 per cent to HK$22.95. Evergrande Real Estate fell 1.5 per cent to HK$3.95 and Country Garden shed 1.91 per cent to finish at HK$3.59.