Shenzhen said on March 29 it would limit gains in new home prices to no more than the pace of economic growth and average income expansion in response to Chinese Government measures to keep housing price gains in check. The city wants new home prices to grow slower than the annual economic and per capita disposable income growth, the city s land and resources commission announced on March 29.
In January, Shenzhen forecast the city economy would expand 10 percent this year, down from 12 percent last year. Urban per capita disposable income was expected to rise 8.7 percent from 32,000 yuan to 35,000 yuan this year.
A day earlier, Shanghai announced that the price increase for new homes this year would be smaller than the increase in its annual economic growth and local incomes. The city government set an economic growth target at around 8 percent this year.
Another 40 Chinese cities implemented similar measures in the past two months after local governments were ordered to submit targets by the end of March. Beijing has yet to set a target for home price control this year.
The northwestern city of Xi an said home price increase would be capped at 15 percent this year. The western city of Lanzhou set a 9-percent ceiling, while the northeastern city of Shenyang set a target of 12 percent, below economic growth rates and in line with average income growth, according to local government Web sites.
The targets of about 10 percent did not make sense because home prices rose more rapidly in China s second- and third-tier cities, said Shen Jianguang, a Hong Kong economist at Mizuho Securities Asia Ltd.
This shows that local governments are not willing to see home prices fall because their revenue is highly reliant on land sales, he said.
