17 Jan 2010

Property prices rise in China

8:46 am on 17 January 2010

Property prices in China rose at their fastest annual rate in 18 months in December.

Official figures show real estate prices rose by 7.8% from a year ago - up from the 5.7% annual rise for November and renewing fears that an asset bubble is developing.

Chinese authorities have expressed concerns that property prices are rising too fast.

On Tuesday, China's central bank announced measures to curb lending in order to reduce real estate investment.

Last year, Chinese banks issued $US1.5 trillion in loans in order to boost economic growth - with a large proportion being used to invest in property.

Banks have been told to increase the amount of capital they hold in order to curb lending. City authorities have been told to speed up property developments and build more low-cost housing.

The government also this month brought back a sales tax on property sold within five years of its purchase to discourage speculators looking to make quick profits.

Lending curbs

The central bank has issued a series of calls recently to banks to moderate their lending.

On Monday, the Xinhua news agency reported that banks extended 600 billion yuan ($US88 billion) in loans in the first week of January.

China is targeting economic growth of 8% this year.