China's house prices tipped to rise 8%

China's house prices are tipped to rise 8% this year.

China's loose monetary policy and strong pentup housing demand will drive up home prices in 2013, but government cooling measures, including a wider trial programme to tax property owners, will keep the market from running away.

A Reuters latest poll of 11 economists and property market analysts, conducted this month predicts an 8% rise in China's house prices this year, followed by a 3% increase in 2014. The forecasts were roughly in line with a previous poll five months ago which showed an increase of 7% in 2013 and 5% in 2014.

This comes as the  S&P/Case Shiller composite index  in the US yesterday reported an annual house price increase of 11% while UK prices are also rising, mainly in the back of big spikes in London.

“Sales performance has been pretty good this year, which will drive up prices. And there is also a lot of liquidity in the property market this year,” said Luo Yu, an analyst with CEBM in Shanghai.

On a scale of 1 to 10 for house prices, where 1 is seen as extremely undervalued and 10 is extremely overvalued, the median forecast of the respondents was 8.

“China's current home prices have far exceeded a sustainable level that the country's economic fundamentals can support,” said Jianguang Shen, chief China economist with Mizuho Securities Asia.

The country's largest real estate developer, China Vanke, reported a 67.6% rise in contracted sales in April from a year earlier. Even as signs emerged that the broader economy was losing some steam, housing inflation nationwide accelerated to its fastest pace in April in two years and new home prices in Beijing rose 10.3% last month from a year earlier.
But warnings have been issued over the potential of a housing market crash in Asia as personal debt rises. http://housepriceuk9.blogspot.com/2013/05/could-asia-be-headed-for-uk-style.html