Measures against speculators gaining traction; downtrend likely to continue
(BEIJING) China’s home prices fell 0.1 per cent in February from January for a fifth consecutive month and are widely expected to continue declining, underscoring the success of Beijing’s efforts to curb speculation.
Chinese Premier Wen Jiabao said on Wednesday that home prices were still far above a reasonable level and that he would keep property tightening measures rolled out in the past two years in place in 2012.
Home prices fell in February from January in 45 of the 70 major cities monitored by the National Bureau of Statistics and remained unchanged in 22 cities. They rose in Jinan, Xining and Baotou.
In January, home prices stopped rising in all 70 cities and fell on average by 0.2 per cent in the month from December.
In year-on-year terms, average new home price remained unchanged in February, according to Reuters’ calculation of NBS data, and fell by 0.4 per cent in both Beijing and Shanghai, the first decline for those cities since China’s property tightening campaign started in late 2009.
‘China’s property prices will likely continue their downward trend, likely going into the second half of 2012 and until policies are altered,’ Mark Budden, China area leader of EC Harris, a global built-asset consultancy, said after the data.
The National Bureau of Statistics has stopped publishing its nationwide home price index since January 2011, but continues to provide city-specific data.
Yesterday, National Development and Reform Commission chief Zhang Ping said China’s economic policy priority was to maintain relatively fast growth, but Beijing cannot lower its guard against inflation risks. ‘First of all, we need to maintain steady and relatively fast economic growth – development is the key for resolving all problems in China,’ he said.
Mr Zhang said the government would maintain prudent monetary and pro-active fiscal policies, and stand ready to fine-tune settings – a consistent refrain from China’s leaders since the autumn of 2011.
He added that the growth versus inflation trade-off was a key policy challenge. ‘It’s a dilemma to stabilise growth and stabilise inflation. Even though inflation has showed signs of stabilisation, we cannot lower our guard against price rises,’ he said.
‘Currently, the situation concerning prices is still severe – global liquidity is ample and global commodity prices are fluctuating at high levels. Pressures on prices will stay over the long term.’
China’s annual rate of inflation cooled to 3.2 per cent in February, bringing it below the government’s 4 per cent target for the first time in more than a year, but policymakers remain particularly sensitive to elevated commodity prices, given China’s huge imports of raw materials.
China’s trade balance plunged US$31.5 billion last month into its largest deficit in at least a decade. Import growth of 39.6 per cent on the year in February was the strongest in a year and more than twice the rate of export growth.
China’s top officials worry that huge injections of liquidity by US, UK and eurozone central banks to stabilise economies still struggling to overcome the aftermath of the 2008/09 financial crisis, are fuelling a speculative bubble in commodity prices.
Meanwhile, economists expect China’s annual economic growth to slow to close to 8 per cent in the first three months of 2012, down from 8.9 per cent in the last quarter of 2011. That would be the fifth successive quarter of slower growth and leave China on track to end the year with its weakest expansion in a decade.
Premier Wen cut the official 2012 growth target to 7.5 per cent earlier this month, down from the 8 per cent targeted in each of the last eight years, in part to create leeway for reforms to underpin domestic demand and reduce dependence on exports and inflows of foreign capital.
Mr Zhang said China faced many challenges in striking a balance between promoting economic growth, adjusting economic structures and controlling inflation.
Investment is still important for supporting economic growth and the government will open up the railways, the financial sector, the power industry, education services and medical care to private investment, he said. – Reuters
Source: Business Times 19 mar 2012