Housing prices increase at fastest pace in a year | Shanghai Daily

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October 16, 2009

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Housing prices increase at fastest pace in a year

THE recovery of the property sector in Shanghai and other cities across China continued in September as housing prices rose at the fastest pace in a year and investment and construction quickened as well.

Property prices across 70 large and mid-sized cities rose 2.8 percent from a year earlier in September, traditionally a boom period, after increasing 2 percent in August, the National Development and Reform and Commission and the National Bureau of Statistics said yesterday.

September prices rose 0.7 percent from the August figures, moderating from the previous month's 0.9 percent increase.

In Shanghai, prices rose 2.3 percent year on year and 0.5 percent month on month.

Home sales values jumped 73.4 percent nationwide to 2.75 trillion yuan (US$402.6 billion) in the first nine months from a year earlier, the government agencies said. The gain was up from a 70 percent rise in the first eight months. Sales volume increased 44.8 percent in the first nine months.

The strong momentum paid off well at the corporate level. Poly Real Estate Group Co, the nation's second-largest listed developer, reported that September sales almost quadrupled from a year ago.

Merrill Lynch economist Lu Ting said that despite government restraint measures, property sales will likely remain robust thanks to improved sentiment and limited new supply, especially in top-tier cities.

"The financial positions of developers improved significantly after they depleted inventories and lost incentives to offer price discounts," he said.

China International Capital Corp analyst Bai Hongwei concluded that much of the growth occurred in small cities. A survey by the brokerage that tracked 16 big cities showed average sales volume fell 6 percent in September from August.

Property prices reportedly continued to rise during the National Day holiday last week, though location was key to completing a transaction. For example, unit sales were down in Beijing and Guangzhou during the holiday period as high prices kept potential buyers away.

Investment in real estate jumped 37 percent in September from a year earlier, compared with a 34.6 percent rise in August and January's 11.6 percent, as bank lending remained at record level.

In September, new domestic-currency loans increased 34 percent to 516.7 billion yuan, the central bank said on Wednesday.

Construction activities also gathered speed, with floor space started and floor space under construction rising 55.9 percent and 66.5 percent, respectively, in September, against 23.9 percent and 40 percent in August.

Lu said property investment growth will remain elevated and should be a major driver of the economy for the rest of the year.




 

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