China’s January home prices rise

Properties under construction in the Daya Bay district in Huizhou, Guangdong province. Real estate prices in China continue to strengthen overall despite a decline in the big cities. (Reuters)
Updated 24 February 2018
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China’s January home prices rise

BEIJING: China’s new home prices grew in January although major cities saw early signs of softening, as the government continued its efforts to rein in speculative demand to fend off bubble risk.
The acceleration in prices across the nation suggests moves by provincial governments to support first-time buyers and upgraders by relaxing some purchase restrictions may be further fanning price gains in a market where fear of missing out is strong and mortgage fraud is rampant.
Average new home prices in China’s 70 major cities rose 5 percent in January from a year earlier and 0.3 percent month on month, according to Reuters calculations based on the data from the statistics bureau on Saturday.
The government removed the sales prices for affordable housing from the latest monthly calculations, distorting comparisons with previous months’ growth data.
Prices in December grew 5.3 percent on year and 0.4 percent on month, based on data which included affordable housing.
The National Bureau of Statistics said in a statement that prices were “stable while slightly lower” last month, as eleven major cities fell year on year.
“The housing prices in tier-one cities reversed from growth to a decline and there was a slowdown in the growth rate in tier two and three cities,” it said.
China’s housing market has boomed since late 2015, giving a major boost to the economy, but is expected to gradually slow as measures to curb property speculation drag on sales.
The challenge for policymakers is to counter the risks from a slowdown in the sector and curbs to excessive borrowing without endangering a growth target of around 6.5 percent this year. A softening but still resilient property market, however, will be welcome news ahead of the annual parliament meeting in March where leaders will set economic targets for 2018.
The data marks the first price decline in tier one cities in more than two years, said Yan Yuejin, an analyst with Shanghai-based E-house China R&D Institute.
Purchase restrictions are also trickling down into lower-tier cities, while monetary policy tightening is leading to higher mortgage rates.
“Tier two and three cities will probably experience a similar decline,” he said.
Those have started knocking some heat off the market. Property sales have slowed across three different tiers in January by more than 10 percent in 15 major cities monitored by China Index Academy, a private property research firm.
Official property sales and investment data for January-February will be released by the Statistics Bureau on March 14.
But demand appeared to be more resilient than expected amid government moves to support “rigid demand” of first-time buyers and upgraders by relaxing some purchase restrictions.
The central Chinese city of Wuhan, for example, announced a pilot program in February that allows first-time buyers priority in winning new home purchase bids.
Some analysts noted that China’s housing market is becoming increasingly polarized, as prices in some smaller cities with no purchase restrictions picked up visibly but were flat or declined slightly month-on-month in most of the biggest cities.


Oil prices up almost 3 pct as OPEC agrees to raise output

Updated 22 June 2018
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Oil prices up almost 3 pct as OPEC agrees to raise output

  • Oil prices rose almost 3 percent on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand.
  • The Organization of the Petroleum Exporting Countries agreed on Friday to boost output from July.

LONDON: Oil prices rose almost 3 percent on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand.
Benchmark Brent crude jumped $2.19 a barrel, or almost 3 percent, to a high of $75.24 before slipping to around $75 by 1305 GMT. US light crude was $1.80 higher at $67.34.
The Organization of the Petroleum Exporting Countries, meeting in Vienna, agreed on Friday to boost output from July after Saudi Arabia persuaded Iran to cooperate in efforts to reduce the crude price and avoid a supply shortage.
Two OPEC sources told Reuters the group agreed that OPEC and its allies led by Russia should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply.
But the real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap.
The deal looked to be in line with many analysts' forecasts.
Analysts had expected OPEC to announce a real increase in production of 500,000 to 600,000 barrels per day (bpd), which would help ease tightness in the oil market without creating a glut.
"The effective increase in output can easily be absorbed by the market," Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas told Reuters Global Oil Forum.
Oil prices have been on a roller-coaster ride over the last few years, with the international marker, Brent, trading above $100 a barrel for several years until 2014, dropping to almost $26 in 2016 and then recovering to over $80 last month.
The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories.
The group started withholding supply in 2017 and this year, amid strong demand, the market tightened significantly, triggering calls by consumers for higher supply.
Falling production in Venezuela and Libya, as well as the risk of lower output from Iran as a result of US sanctions, have all increased market worries of a supply shortage.
Another big uncertainty for oil is the escalating dispute between the United States and its trading partners, which could hit US crude oil exports to China.
Asian shares hit a six-month low on Friday as tariffs and the US-China trade battle start taking their toll.
If a 25 percent duty on US crude imports is implemented by Beijing, American oil would become uncompetitive in China, forcing it to seek buyers elsewhere.
Chinese buyers are already starting to scale back orders, with a drop in supplies expected from September.