Property risk reigniting
Fresh worries over sustainability of property investment in China
BEIJING: Business is booming in Beijing’s real estate offices – good news for property agents like Zhang Huanhuan, but a headache for China’s policymakers as worries resurface about the sustainability of investment in the sector.
“We’ve got off to a flying start in 2013 – transactions are picking up, so are prices,” said Zhang, a saleswoman at an outlet of Maitian Real Estate Agency Co in the capital.
Recent sales included six high-end apartments at a condominium in Beijing’s Dongzhimen area, a neighbourhood favoured by the city’s expatriates, she said.
Government data today is likely to show China’s annual economic growth rebounded to 7.8% in the fourth quarter of 2012 from 7.4% in the third, snapping seven straight quarters of weaker expansion.
Chinese leaders may by reassured that the economy has finally turned the corner – even though the recovery is likely to be tepid – but they face a delicate policy balance amid worrying signs of a renewed property frenzy.
The home buying spree has not been confined to Beijing.
New home prices in 70 major Chinese cities rose 0.3% in November from October – the fourth month in the last five to show a rise – a modest increase but the most, nonetheless, in 19 months, official data showed.
The new leaders of the ruling Communist Party have promised to keep pro-growth policies in place in 2013, amid expectations they will speed up migration to China’s burgeoning cities by overhauling the rigid household registration, or “humour”, system, which could unleash fresh housing demand.
While reaffirming existing property cooling policies to fend off speculation, they may be tolerating a modest pickup in the property sector to aid an economic recovery still heavily reliant on investment, analysts said.
China’s home prices started to rebound in mid-2012, as the People’s Bank of China began to ratchet up its policy easing as part of Beijing’s growth-supporting policies.
Analysts believe that government curbs on home purchases and prices will prevent sharp increases for now. Those polled by Reuters in December expected China’s national housing prices should rise an annual 7% in 2013 and 5% in 2014.
A 25% jump in housing prices in 2009 prompted the government to take a raft of measures, including lending curbs, higher mortgage rates and restrictions on the number of homes each family can buy, in a bid to deflate housing bubbles.
Some analysts fear the authorities could tighten property policies further if they believe that bubbles are building up again, undermining the still-fragile recovery.
City authorities in Beijing had stopped issuing pre-sales permits to developers found raising prices on their new property projects, as one of the ad hoc controls to curb housing inflation, said a senior executive of a developer in Beijing. — Reuters