Real Estate

Property prices in 70 major Chinese cities rose 0.3 percent in Nov month-on-month and 7.7 percent year-on-year, the National Bureau of Statistics (NBS) said Friday.

The annualized growth rate, which peaked at 12.8 percent in April, was down from an 8.6 percent increase in October, and fell for the seventh consecutive month after the government began stepping up controls to curb prices in April.

New home prices climbed 9.3 percent year-on-year in November and 0.4 percent month-on-month. Prices for second-hand homes rose 5.6 percent year-on-year and 0.3 percent month-on-month.

Turnover of open-market property in terms of floor space rose 9 percent month-on-month to 101.13 million square meters in November while the value of sales grew 4.1 percent month-on-month to 528.6 billion yuan ($79.4).

Property investment rose 36.7 percent year-on-year to 462.8 billion yuan in November. That brought combined investment in the first 11 months to 4.27 trillion yuan, up 36.5 percent year-on-year.

The worst performing group on the Shanghai Composite Index this year are China’s property developers, and BNP Paribas says to expect the correction in Chinese real estate prices due to lending curbs and tighter money to intensify into 2011. This is the result of direct government action and it is bound to have a negative impact on the whole Chinese economy.

Private housing accounts for 13% of total investment in urban areas, and home construction accounts for 14% of all workers in urban areas, according to dailymarkets.com. Home construction also consumes around 40% of the steel and lumber produced in China.

China's property prices are likely to decline almost 20 percent next year starting from March or April, according to a report issued by the Beijing-based Renmin University of China (RUC).

Developers' financial strains, due to continuous government cooling measures on the nation's red-hot real estate market and monetary policy adjustment, will drag down the real estate prices, but the property market will not suffer "hard landing", the report said.

China's policy makers are likely to find it challenging to tame the country's overheated real-estate market, analysts said, despite the strong message sent by the government's unexpected interest-rate rise this week.

Major economic data scheduled for publication Thursday are expected to show still-fast Chinese growth and a pickup in inflation—conditions that may have given the central bank room to push through the rate increase this week. Chinese policy makers have shown increasing concern that a property bubble risks both destabilizing the economy and creating social tensions among urban Chinese priced out of the market.

Growth in China's gross domestic product was predicted to have eased to an annual rate of 9.5% from a year earlier in the third quarter from 10.3% in the second quarter, according to the median forecast of 14 economists polled by Dow Jones Newswires. China's consumer-price index likely rose 3.6% from a year earlier in September, according to the poll, up from a 3.5% gain in August.