China's failing home curbs risk bubble that may hurt economy

Shanghai

CHINA's attempts to slow runaway home-price growth in major cities are showing little sign of success, stoking the threat of a housing bubble that could destabilise the economy.

New home prices rose the most in six years in August, jumping 1.2 per cent from July, according to Bloomberg calculations based on government data. Home prices rose in 64 of 70 cities tracked by the government, up from 51 the previous month. Shanghai prices surged a record 4.4 per cent for a year-on-year gain of 31 per cent, while Beijing's climbed 24 per cent from a year earlier.

The gains suggest that moves by city governments to cool surging home prices over the past six months are doing little to damp demand from investors looking for alternatives to stocks and overseas property. That may prove to be a challenge for cen…