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China’s housing price inflation hits new high

(BEIJING) Housing price inflation in China hit a new monthly high of 9.5 per cent in October despite government efforts to cool the boom, a state news agency reported yesterday.

The October rate was up 0.6 percentage point from September’s housing price inflation, the Xinhua News Agency said, citing the government’s National Bureau of Statistics. The communist government is trying to curb a sharp rise in real estate prices and guarantee adequate housing for the poor.

Regulators have raised interest rates, ordered developers to build more small, low-cost homes and imposed curbs on the purchase of second homes and foreign investment in real estate.

The monthly rise in housing prices in 70 Chinese cities ‘hit a new high despite the government’s efforts to curb surging property prices’, Xinhua said.

The price rise has been fuelled by an export boom that has sent cash flooding through China’s economy.

Chinese leaders worry that a frenzy of building could ignite a debt crisis if new shopping malls, luxury apartments and other projects fail to attract buyers and developers default on bank loans.

They also worry about the possible political fallout if housing prices rise beyond the reach of hundreds of millions of Chinese who have been left behind by the country’s boom.

Prices of luxury homes rose fastest in October, climbing by 12.3 per cent, Xinhua said. It said prices of low-cost housing rose 3.3 per cent. In Beijing, prices rose 17.8 per cent, Xinhua said.

The highest rate reported was 19.1 per cent in Ningbo, a booming port south of Shanghai in a major exporting region.

 

Source: AP (Business Times 16 Nov 07)

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