CHINA S property prices rose at the slowest pace in 10 months in October after the government raised interest rates and expanded measures to limit the risk of asset bubbles in the world s fastest-growing major economy.
Home prices in 70 cities climbed 8.6 percent from a year earlier, the statistics bureau said in a statement yesterday. Price gains also slowed to 0.2 percent from September after increasing 0.5 percent last month.
Property shares led declines in Chinese stocks yesterday as the data showed government measures, including suspending mortgages for third-home purchases and a pledge to speed up trials of property taxes, may not be enough to ease gains in home prices.
The rate hike in October has had a quick impact on the Chinese property market, said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. House price inflation is moving in the right direction over the last few months, but officials will likely want to see more progress, suggesting that the policy bias remains in favor of more rate hikes.
Sales volume dropped 11 percent in October from the previous month, while the value of transactions fell 7.7 percent. China s property investment rose 37 percent to 455.8 billion yuan (US$69 billion) in October from a year earlier, and increased 37 percent to 3.81 trillion yuan in the first 10 months.
Only eight out of the 70 major cities monitored by the government posted a drop in property prices, including a 0.1 percent decline in Shanghai from September.
In China, a residential property is now the preferred savings vehicle, because it provides a better hedge against inflation, Michael Kurtz, head of Asian strategy at Macquarie Group Ltd., said in Hong Kong. As long as nominal interest rates remain as low as they are, Chinese households are going to continue to favor property over bank deposits as a form of savings.
Private sales data indicated further strength in October sales. In Shanghai, home prices rose 3.1 percent from September, according to UWin Real Estate Information Services Co.
Shimao Property Holdings Ltd., a Shanghai-based developer, reported a 15 percent increase in sales value in October from the previous month, while China Vanke said October contracted sales more than doubled.
Demand for properties remains strong despite many tightening measures, said Liu Ligang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. (SD-Agencies)
