China's home prices continue to rise

Prices of both new and existing homes continued to rise in most Chinese cities in August, according to official data released on Wednesday. Of a statistical pool of 70 major Chinese cities, 66 saw a month-on-month rise in new home prices, up from 62 in July, the National Bureau of Statistics (NBS) announced. According to the bureau, 58 cities reported month-on-month price gains in resold homes in August, compared to 57 in July. On a year-on-year basis, new home prices rose in 69 cities last month, the same as the July figure, while 68 reported higher year-on-year prices for resold homes in August, up from 67. Growth rates in first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen were significantly higher compared to second- and third-tier cities. New home prices in the first-tier cities rose by 18 to 20 percent year on year while those in 35 third-tier cities rose by around 6 percent on average. The high growth rates in first-tier cities were partly due to a lower comparison base in the same period of last year, said Liu Jianwei, a senior statistician with the NBS. Prices in 70 major and medium cities dropped from a year earlier in August 2012, suggested the bureau's data. It showed that the average month-on-month growth rate of new home prices narrowed to 0.8 percent in August from 1.7 percent in March. For resold home prices, the month-on-month growth rates ranged from minus 0.3 to 1.6 percent, while the year-on-year growth rates ranged from minus 4.9 to 16.4 percent. The data cover the nation's large and medium-sized cities, including Beijing and Shanghai, provincial capitals, and other cities. "The market is polarized and it's time to introduce a long-term mechanism to balance it," said Zhang Dawei, director of Centaline Property's research center, adding that the market in first- and second-tier cities may explode while third- and fourth-tier cities may build up inventories in future. Runaway prices led the government to issue guidelines in March to tighten control of the real estate sector, including higher transaction taxes, restrictions on purchases of multiple homes and higher down payments. But the guidelines failed to arrest the surge. Zheng Xinli, deputy managing director with the China Center for International Economic Exchanges, suggested the government should work to increase supplies of both land and houses, while use administrative means to ensure the demand from low-income people is met.