China home prices pick up in March

Chinese home prices picked up in March as buyers rushed to beat new government policies aimed at cracking down on speculation, an independent survey showed Monday. The cost of a new home in 100 major cities was up 3.9 percent year-on-year to an average 9,998 yuan ($1,587) per square metre, the China Index Academy said, the fourth consecutive monthly rise. In February, home prices rose 2.48 percent. On a monthly basis, prices rose 1.06 percent in March from February, continuing a run of increases for the 10th month, the organisation said in a statement. China issued new rules in March to rein in prices, including a nationwide capital gains tax of 20 percent on profits owners make from selling residential property. Major Chinese cities, including the capital Beijing and commercial hub of Shanghai, have started to announce detailed policies on how they will implement the central government edict. "Against the unclear policy trend, most buyers caught 'the last bus' to enter the market," said the China Index Academy, which is owned by SouFun Holdings, China's biggest real estate website operator. "A portion of demand surged into the market accelerating the housing purchase process on panic and psychological pressure from worries over an increase in tax," it added. Chinese couples have also flocked to divorce to evade the new tax, through a loophole which allows couples with two properties who separate and put each house into one person's name to then sell them tax-free in certain cases. At the same time, a state media report on Monday warned of the possibility of buyers in Beijing entering fake marriages to circumvent a new rule barring single people from purchasing a second property in the capital. Some analysts question what impact the latest government measures will have in the shorter term. "The good news is that the new tightening measures will likely have only limited impact on overall property sales and construction this year," said Wang Tao, a Hong Kong-based economist for UBS. "The bad news is that if the current measures do not work, new rounds of tightening will be rolled out," she said in a research report last week. For the past three years, China has sought to control residential property prices with measures including restrictions on second and third home purchases, higher minimum downpayments, and taxes in some cities on multiple and non-locally owned homes.