Analysis: Property risk reigniting as China economy turns corner

Wed Jan 16, 2013 5:38pm EST
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By Kevin Yao and Xiaoyi Shao

BEIJING (Reuters) - Business is booming in Beijing's real estate offices -- good news for property agents like Zhang Huanhuan, but a headache for China's policymakers as worries resurface about the sustainability of investment in the sector.

"We've got off to a flying start in 2013 -- transactions are picking up, so are prices," said Zhang, a saleswoman at an outlet of Maitian Real Estate Agency Co. in the capital.

Recent sales included six high-end apartments at a condominium in Beijing's Dongzhimen area, a neighborhood favored by the city's expatriates, she said.

Government data on Friday is likely to show China's annual economic growth rebounded to 7.8 percent in the fourth-quarter of 2012 from 7.4 percent in the third, snapping seven straight quarters of weaker expansion.

Chinese leaders may by reassured that the economy has finally turned the corner -- even though the recovery is likely to be tepid -- but they face a delicate policy balance amid worrying signs of a renewed property frenzy.

The home buying spree has not been confined to Beijing.

New home prices in 70 major Chinese cities rose 0.3 percent in November from October -- the fourth month in the last five to show a rise -- a modest increase but the most, nonetheless, in 19 months, official data showed.

"The first phase of 44 suites of our project launched last week has almost sold out, with only 6 suites left," said a salesman surnamed Qua, marketing a development by Wharf Holdings (0004.HK: Quote) in Hang, capital of eastern province of Zhejiang.   Continued...

A construction site of a residential compound is reflected on the glass facades of a office building in Taiyuan, Shanxi province, January 15, 2013. REUTERS/Stringer