ST : Chinese property prices up in Sept

Oct 16, 2010

Chinese property prices up in Sept

BEIJING: Chinese property prices rose for the first time in four months in September, a sign that the market is ready to pounce on any let-up by the government in its crackdown on speculation.

A resumption of capital inflows to China in recent weeks and expectations of more monetary easing in developed markets have triggered worries that Chinese asset markets could soon face steep upward pressure.

In fact, Beijing had already detected the return of property inflation, reinforcing its tightening measures at the end of last month.

'It looked like the impact of the April (initial tightening) policy had started to fade, because we did see prices picking up again,' said Ms Jinny Yan, an economist at Shanghai's Standard Chartered Bank. 'So it was obviously conviction from the centre that we need to keep prices stable. Without any movement in interest rate policy, this is perhaps the No.1 focus for Beijing to keep asset price inflation at bay.'

Property prices were up 0.5 per cent in September from a month earlier, the first month-on- month rise since May, according to figures released by the National Bureau of Statistics yesterday.

Beijing took fresh steps on Sept 29 to reinforce its curbs on property speculation, in response to signs of a pick-up in housing deals and prices. Early evidence is that it has been successful.

'There has to be a downward correction in property prices,' said Mr Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a government think-tank. 'Otherwise, we may see a big bubble in property market.'

Mr Yi said the tool needed to curb property speculation would be an annual housing tax, a levy based on the appraised value of homes.

REUTERS