UPDATE 2-China property prices rise at record pace, seen easing

* April property inflation the fastest on record

* Some analysts expect rises may ease due to govt measures

* Recent measures will be felt more fully later in 2010

* Data could add to investor fears of more policy
tightening

(Adds details)

By Langi Chiang and Lee Chyen Yee

BEIJING, May 11 (BestGrowthStock) – Property prices in China’s
major cities rose by their fastest clip on record in April, but
analysts said the government’s latest crackdown on speculation
could slow further gains in coming months.

Soaring home prices, combined with a pick-up in the broader
consumer price index to an 18-month high, highlight challenges
facing Chinese policymakers as they struggle to contain asset
bubbles and inflationary pressures as the economy booms.

But analysts said property inflation, at least, will likely
ease over the summer after a flurry of government steps in
recent weeks to discourage speculative buying.

“From what we’ve seen, the number of transactions are
already plummetting due to the government’s latest property
measures,” said K.K. Lai, southern China chief executive of
property services firm Centaline.

“At the rate we’re going, we’re likely to see the rise in
urban property prices easing to the single digits in the next
couple of months on a year-on-year basis,” Lai said.

Nationwide, property prices in 70 cities rose in April by
an average 12.8 percent from a year earlier, higher than the
annual 11.7 percent increase in March and the fastest pace
since the National Bureau of Statistics began to put out
monthly figures in July 2005.

On a monthly basis, prices rose 1.4 percent, higher than
1.1 percent rate in March and the quickest pace since December,
when the monthly increase was 1.5 percent, the bureau said on
Tuesday on its website, www.stats.gov.cn.

However, many analysts say the way the index is compiled
seriously understates the degree of property inflation in
China.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a table of property prices by city, click
[ID:nTOE64A00Y]

For a breakdown of property investments, see
[ID:nTOE64A018]
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The April data marked the 11th consecutive month of
year-on-year rises after seven months of declines.

Real estate investment in the first four months of the year
increased 36.2 percent compared with the same period last year.

Some analysts and officials said a slew of measures
introduced in mid-April, including raising down payments and
mortgage rates for second homes, would likely have a bigger
impact in coming months. [ID:nTOE63E08Y]

Lai said the number of transactions in China’s first-tier
cities had fallen sharply. In the first 10 days of May,
transactions plunged 80 percent from a year earlier in
Shanghai, and 90 percent in Beijing and Shenzhen, he added.

“The measures to cool down the property market has produced
some initial impact and the overly fast-rising property price
rises have been curbed,” Sheng Laiyun, spokesman for the
National Bureau of Statistics, said at a briefing.

Some analysts said that if prices failed to ease for the
rest of the year, there was still a possibility of the
government introducing a controversial property tax on a trial
basis.

“A property tax trial will weigh heavily on market
sentiment,” Song Li, an analyst with Huatai United Securities
in Shanghai.

Flurries of anti-speculation measures and fears of more
aggressive policy tightening by Beijing have already made stock
markets in Shanghai (.SSEC: ) and Hong Kong (.HSI: ) the worst
performers in Asia so far this year, with shares of property
developers among the hardest hit.

As China’s economic growth accelerates at double-digit
levels, the government has been increasingly concerned about
inflationary pressures, and the risks of social unrest due to
rising home prices.

Consumer prices rose 2.8 percent in the year to April,
topping forecasts for a 2.7 percent rise and the biggest move
since October 2008, other data showed on Tuesday.
[ID:nSGE64A094]

Residential costs, which cover mortgage payments, rent,
building materials and utility charges, now make up 15 percent
of the consumer price index (CPI), with the government planning
to increase the weightage. [ID:nTOE63800O]

While China has taken largely modest steps in recent months
to slowly brake its rapid growth, economists believe it will
have to raise interest rates at least once later this year to
curb mounting price pressures, and will likely allow its yuan
currency (CNY=CFXS: ) to appreciate.

Growth Stocks

(Additional reporting by Simon Rabinovitch and Aileen Wang;
Editing by Ken Wills & Kim Coghill)
(See www.reutersrealestate.com for Reuters’ global service for
real estate professionals)

UPDATE 2-China property prices rise at record pace, seen easing