Chinese property prices continue to climb

The Chinese residential property market saw prices grow 10.8 per cent in the first half of 2013, according Knight Frank’s Global House Price index. The jump occurred despite in a slowdown in the country’s economic growth from 7.7 per cent in the first quarter of the year to 7.5 per cent in the second three month period.

The rising price follows the central government’s Five New Measures, which were introduced in March to try and cool the surging values.

The measures include a 20 per cent capital gains tax on existing home sales in Beijing, only waived if the homeowner is selling the property more than five years after their purchase and the apartment is the only one owned by the family.

Shanghai, meanwhile, has a price control target in place for new homes, while banks are not permitted to extend loans to buyers of third or more homes.

In Guangzhou, measures include a restriction on non-registered residents, who are only allowed to buy one home in the city - providing they can present income tax or social insurance certificates to prove they have lived in the city for 12 months within the two years before their property purchase.

“Witnessing how different local authorities have responded to these policies underlines the issues that China continues to battle with as it tries to cool its housing market down,” comments Nicholas Holt, Knight Frank’s Asia Pacific Research Director.

“On the one hand, local authorities do not want to “bite the hand that feeds them”, while on the other, they must be seen to support China’s State Council policies.

“This is all being fuelled by investors who, amid growing wealth continue to invest significant proportions of their money into property. The lack of alternative investment options for many retail investors makes this situation unlikely to Change.”