China’s home prices start edging up again

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Residential property prices in China’s major cities rose in September for the first time in four months, boosting the likelihood that the government will continue trying to cool the nation’s scorching housing market.

Prices rose 0.5% and the amount of floor space sold soared 52.4% compared with August, according to an index of 70 leading cities compiled by the China’s National Bureau of Statistics.

The increase comes after months of measures aimed at cracking down on speculators and runaway prices. This year, the central government has already raised down-payment requirements and restricted the purchase of multiple homes, and it is discussing introducing American-style monthly property taxes in some cities.

Analysts say that controlling housing prices weighs heavy on lawmakers who worry that angst over homeownership could spill into social instability. The nation’s top leaders kicked off a four-day plenum in Beijing on Friday that will likely focus much on how to resolve China’s yawning income gap.

The government is interested in stabilizing prices rather than having them decline, for fear that falling prices could jeopardize banks and choke off economic growth. Instead, planners are focused on increasing supply. Plans are underway to build more affordable housing, including starting on 5.8 million subsidized units nationwide by the end of the year.

Critics say the government’s efforts will fall short unless they address more fundamental reasons for China’s real estate boom: the dearth of investment alternatives and the riches that local governments have accumulated transferring state-owned land to developers.

Despite the month-over-month growth, September marked the lowest year-over-year increase in 2010 so far. Prices were up 9.1% from September 2009 -- a slower rise than the 9.3% jump recorded in August. The record remains April, when prices leaped 12.8% from a year earlier.

-- David Pierson in Beijing