China Housing Prices Rise at a Slower Pace

SHANGHAI¡ªHome prices in major Chinese cities rose modestly in September from August, according to a private poll, indicating that Beijing has made some progress in keeping housing costs under control despite recent signs of market strength.

The increase, marking the fourth consecutive month-to-month rise in a survey of conditions in 100 major Chinese cities, illustrates the challenges China faces as it continues to try to tame the market. Beijing remains concerned about resurgent housing inflation that could threaten both economic and social stability.

At the same time, authorities face pressure to rekindle broader economic growth, which has slowed to its lowest rate since the global financial crisis. The property sector is a key contributor to Chinese economic growth.

Some local governments in China have made efforts to revive housing sales, though many have backed off following pressure from Beijing.

The cities of Shanghai and Guiyang, capital of southwestern Guizhou province, in recent days became the latest to roll out measures to encourage property purchases.

The average price of housing in September was 8,753 yuan ($1,384) a square meter, 0.17% more than the 8,738 yuan of August and moderating from August's 0.24% sequential rise, according to a survey of property developers and real-estate firms released Monday by data provider China Real Estate Index System.

Compared with a year earlier, the average price of housing fell for the fourth consecutive month, declining 1.4% from 8,877 yuan in September 2011.

The survey, compiled with online real-estate brokerage SouFun Holdings Ltd., showed that compared with August, housing prices rose in 60 cities, fell in 38 cities and were unchanged in two cities in September.

"Housing prices are stabilizing, and small increments like this are acceptable in the eyes of the government," said GaveKal Dragonomics analyst Rosealea Yao.

The central government has worked for more than two years to prevent prices from spiraling, using a combination of credit curbs, higher down-payment requirements and limits on the number of properties purchased.

Prices fell for much of this year, but a policy shift in February to help first-time home buyers has helped spark a modest market upturn in recent months.

The latest government data show property construction starts increased in August from a year earlier, marking the first increase since February. Sales and investment rose as well.

In terms of floor area, construction starts from January through August decreased 6.8% from the year-earlier period to 1.23 billion square meters.

Residential and commercial property sales totaled 3.401 trillion yuan in the first eight months of the year, 2.2% more than in the year-earlier period. Sales totaled 2.87 trillion yuan from January through July, down 0.5%.

Signs of a warming market have renewed calls by officials for stricter implementation of existing measures to control the property market, including purchase restrictions. But many local governments are suffering as income from land sales and property-related taxation dwindles, so they have attempted to stimulate property sales at the risk of their measures being overturned by the central government.

Guiyang will give nonresident permit holders who purchase residential or office space the same treatment as permanent residents, according to a report by the official Guiyang Daily posted on the municipal government website on Saturday. That means nonresidents who qualified to buy property in the past can now buy two properties.

Shanghai's municipal government has eased restrictions on purchases of government-subsidized apartments to allow two-person households to buy two-bedroom apartments, according to a statement posted on its website on Saturday.

Previously, individuals and two-person households were generally allowed to purchase only a one-bedroom government-subsidized apartment.


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