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China's home prices expected to rise in 2018 on falling inventories

Beijing

CHINA'S home prices are expected to rise faster this year than previously thought thanks to tight supply and government policies that promote smaller cities seeking to lure first-time buyers and upgraders, a Reuters poll showed.

But price growth is still expected to be relatively muted - well below the gains made in 2017 - as rising borrowing costs and other curbs are likely restrain the market and pressure developers to accelerate project launches to raise cash.

China's housing market has enjoyed a more-than-two-year boom, giving a major boost to the economy but also fanning fears of bubbles, prompting authorities to impose measures to stem speculation since 2016.

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While more than 100 cities have introduced measures to cool prices, policymakers have been careful not to tap the brakes too hard as real estate has been a major contributor to economic growth.

China aims to pursue "stable and healthy development" of the property market in 2018, protecting the interests of first-time buyers and upgraders while taming speculation, Chinese Premier Li Keqiang said in his work report to the annual meeting of parliament in March.

Nationwide, new home prices on average are expected to increase one per cent for the whole year, after rising a median 2.5 per cent in the first six months from a year earlier, according to a Reuters poll that surveyed 13 property analysts and economists from March 23 to 30.

"Judging by the government's macro-prudential policies, prices in the biggest tier-1 and tier-2 cities will remain stable or even tread lower, but it is likely that the rest of China will still enjoy moderate price gains," said Emily Cao, head of research at Colliers International in Beijing. REUTERS