Home Prices Rise in 67 Chinese Cities

19 July 2011

Home prices in 67 Chinese cities increased last month, with Beijing and Shanghai showing accelerating growth for the first time since government efforts to curb price rises. Property prices in Beijing increased by 2.2% last month year-on-year, compared to 2.1% in May, and property prices in Shanghai increased by 2.2% compared to 1.4% in May.


At the moment the Chinese government is still intensifying its efforts to rein in property price increases and is due to expand its measures to smaller cities after developers posted gains for sales during the first half of this year, and the number of housing transactions increased by 31% last month even though China has increased the necessary deposits on certain mortgages.


Experts feel that the government's restrictions are likely to have somewhat limited effect due to the fact that low interest rates combined with high inflation make a property extremely attractive to investors looking for high yielding assets. Inflation in China is currently running at 6.4%, which is a three-year high.


However Michael Kilbaner, head of China research at Jones Lang LaSalle Inc has recently said that prices in Beijing and Shanghai are increasing by less than inflation, so affordability in these two cities at least is improving.


Prices in Guangzhou increased by 5.4% in June year-on-year, compared to 5.1% in May, and in the city of Chongqing, prices increased by 5.8% in June, compared with 5.3% in May, and data from the government showed that over half of the 70 cities tracked at least matched the gains made in May or exceeded them.

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