Chinese Property Prices Continue to Climb

China’s new-home prices rose last month in 68 of 70 cities tracked by the government, indicating Premier Li Keqiang will need to maintain efforts to cool the property market even as economic growth slows.

Increases in Guangzhou, Beijing and Shanghai were the biggest on a yearly basis since a change in data methodology in January 2011, a report from the National Bureau of Statistics showed May 18. The number of cities showing gains from a year earlier was the same as in March.

China’s policy makers are trying to avoid property bubbles and make homes more affordable while bolstering an economy that lost steam in the first quarter. Expanding a campaign against housing speculation could choke off real-estate development that is helping counter a slowdown in manufacturing investment and supporting demand for steel, cement and household goods.

“The government faces a dilemma,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “They have to make a choice between property prices and economic growth.”

Efforts to cool the property market coincide with rising labor costs that threaten to erode China’s attractiveness as a world manufacturing hub. The average annual wage for urban private company employees jumped 14 percent in 2012 from a year earlier, the statistics bureau said last week. Economic growth of 7.7 percent in the first quarter trailed analyst estimates.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.