New home sales hit record US$1.1 trillion

SHANGHAI: China’s new home sales exceeded US$1 trillion (RM3.3 trillion) for the first time last year as property prices in cities the government considers first tier surged in the absence of more nationwide property curbs.

The value of new homes sold in 2013 rose 27% from 2012 to 6.8 trillion yuan (RM3.7 trillion), the National Bureau of Statistics said in a statement yesterday. New-home prices in December climbed 20% in Guangzhou and Shenzhen from a year earlier, and jumped 18% in Shanghai and 16% in Beijing, the bureau of statistics said on Jan 18.

“Clearly, the real estate market in China remains hot,” Dariusz Kowalczyk, a senior economist and strategist at Credit Agricole CIB, said in an email reply. “Urbanisation and investment demand are leading to rising sales volumes, while prices continue to gain. China’s growth remains heavily dependent on the real estate market.”

Premier Li Keqiang hasn’t imposed additional nationwide measures to cool the market since his predecessor Wen Jiabao stepped up a three-year campaign in March, ordering higher down payments and interest rates for second-home loans in cities with “excessive fast” price gains. Instead, Li has left it up to individual cities to impose their own curbs, with at least 10, many of them provincial capitals, tightening local property policies since November.

Shenzhen, Shanghai and Guangzhou have all raised minimum down payments for second homes to 70% since November.

“The effect of those measures was limited last year because in first-tier cities, demand still outpaced supply,” Ding Shuang, a Hong Kong-based senior China economist with Citigroup Inc said in a phone interview.

The value of new housing sales was 5.4 trillion yuan in 2012, an 11% gain from the previous year, according to the government data.

China’s economy rose 7.7% last year from 2012, the government said yesterday, the same as the median estimate in a Bloomberg News survey of 31 analysts.

Investment in homes, office buildings, malls and other real estate gained 20% to 8.6 trillion yuan last year from a year earlier, according to the statistics bureau data. New property construction rose 14% to two billion sq m.

The Shanghai Stock Exchange Property Index, which tracks 24 developers traded in the city, was little changed at the close of trading, while the benchmark fell 0.7%.

New-home sales volume rose 18% to 1.2 billion sq m, the government data showed. China’s existing-homes market is about one-third of new homes by sales, according to Centaline Property Agency Ltd, because the nation only allowed private home ownership in 1998.

Existing-home prices rose 20% in Beijing last month from a year earlier and increased 14% in Shanghai, according to the Jan 18 data.

Private figures also showed no sign of cooling in the property market. Home prices in December had the biggest year-on-year gain in 2013, increasing 12%, according to SouFun Holdings Ltd, China’s biggest real estate website owner.  — Bloomberg


This article first appeared in The Edge Financial Daily, on January 21, 2014.