House prices up in many cities, but jump is limited by policies

More Chinese cities saw an increase in housing prices in October than did the previous month, but the government's price control measures helped to keep the rises small. The National Bureau of Statistics reported on Sunday that 35 of China's 70 major cities witnessed a month-on-month price rise, up from 31 in September. Even so, the average change in price remained below 0.5 percent. Year-on-year, as many as 56 of the cities posted a drop in their housing prices in October, and only 12 saw higher prices. The recent rebound in the market shows that "demand continues to be strong" among homebuyers who buy residences for their own use rather than as investments, said Zhang Lei, an analyst with real estate brokerage firm Century 21st Property. As for November, the first half of the month saw 10,314 housing units sold in Beijing, Century 21st said in a report released on Friday. The number was up by 134 percent from what it had been in the same period of October. Zhang said the pace of housing transactions may continue to increase until the end of the year. But, in general, "property prices are likely to remain stable in the coming months, at least through March 2013, and policies during this period will probably remain unchanged," Zhang said. Speaking at a news conference during the 18th Party congress, Jiang Weixin, minister of housing and urban-rural development, said the government will not moderate its real estate policies in the foreseeable future. At the same time, the government plans to start building about 6 million more subsidized housing units for low-income urban households next year. Industry sources say banks in some of China's second- and third-tier cities have taken steps recently to tighten up the mortgage market. China's real estate policies are likely to remain stringent in the coming five to 10 years, according to a research paper released on Friday by China Index Academy, a research body specializing in the real estate industry. Curbing housing purchases for investment purchases will continue to be the policy's chief priority. That end will be pursued by restricting the number of houses that can be purchased and continuing to offer slightly reduced mortgage rates to first-time homebuyers in the short run, the report said. Despite the tight real estate policies, the pace of urbanization and the gradual improvement in residents' incomes in China will still help the industry to develop soundly in the coming decade, it said. Alastair Hughes, CEO of Jones Lang LaSalle Asia Pacific, said foreign institutional investors continue to seek investment opportunities in China. "They care more about long-term prospects," Hughes said. "Therefore, short-term fluctuations in the market will not drive them away." Goodman Group, an Australia-based developer that specializes in industrial real estate, announced on Wednesday that it started work on 260,000 square meters of new developments on the Chinese mainland during the third quarter. "We continue to be confident of China's economic outlook as strong domestic consumption prevails, which is in turn a key driver of demand for prime logistics and warehouse space," said Philip Pearce, Goodman managing director for Greater China.