Monday, May 10, 2010

Chinese Real Estate Prices Jump Most in 5 Years

Bloomberg details:

China’s property prices rose a record in April, defying government measures to stem gains and suggesting more drastic curbs are needed.

Residential and commercial real-estate prices in 70 cities climbed 12.8 percent from a year earlier, the National Bureau of Statistics said on its website. That topped the 11.7 percent surge in March, which was a record then for the data series that goes back to 2005.
Below is a chart of the national "70 Medium-Large Sized Cities" real estate index, along with China's 5 largest cities showing the widespread jump for new, existing, and the broader index.



And while there are conflicting reports (the Bloomberg article has a quote claiming “the only reason why April posted a gain was the low basis of comparison from last year”), the data seems to show the pace was accelerating. Economic Times with those details:
Property prices rose 1.4 percent from the previous month, higher than the 1.1 percent pace in March and logging the quickest pace since December, when the monthly increase was 1.5 percent.

Moreover, many analysts say the way the index is compiled seriously understates the degree of property inflation. Real estate investment in the first four months increased 36.2 percent compared with the same period last year. Year-to-date investment in the first three months of 2010 was up 35.1 percent.
A chart showing the year over year change vs. the month over month change annualized seems to show an increased appreciation.



China is now apparently ready to do whatever it takes to fight the bubble:
China, trying to peel back the effects of a $586 billion stimulus package and lending binge that drove a surge in home prices, is stepping up efforts to cool the market with policies Deutsche Bank AG described as “draconian.” It ordered developers not to take deposits for sales of uncompleted flats without proper approval, curbed loans for third-home purchases, and on May 2 boosted banks’ minimum reserve requirement for the third time this year.
How much of an impact can this all have? Well, if one were to believe a Business Week article (I believe the direction, not the scale) a LOT.

Beijing News said property prices in the capital slumped more than a third over the past one month.

Housing prices fell 31 percent for the week ending May 9 from the week ending April 11, to average price of 16,898 yuan per square meter, the Beijing News reported today, citing statistics from consulting firm Comprehensive Real Estate Services Corp.

I don't buy 31% in a week, but it shows just how much air is in the bubble if that kind of number seems somewhat reasonable.

Source: National Bureau Statistics of China