China’s home prices rebound in June

More major cities in China saw home prices rise in June from May, as the country’s property sector has showed signs of warming following government efforts to stimulate the slowing economy, official data showed Wednesday.

In June, 25 cities, drastically up from six in May, out of a statistical pool of 70 major cities recorded higher new home prices than in the previous month, the National Bureau of Statistics (NBS) said in a statement.

Twenty-one cities saw drops in new home prices last month, down from 43 in May, while prices in 24 cities remained the same, according to the NBS data.

It marked the first time since September 2011 for the number of cities with price increases to exceed the number of cities that experienced drops, although the rises in the 25 cities were all less than 0.6 percent.

“China’s efforts to control the property sector are still in a crucial stage and the task remains arduous,” said Ma Xiaoming, a senior NBS statistician.

He attributed the price rises to recent interest rate cuts implemented by the government to bolster the economy and the altering mindset of home buyers who expected the market to warm up.

China has tightened its curbs on the property sector since 2010 as home prices rocketed beyond the reach of average wage earners.

The government has restricted home purchases in several cities while requiring higher down payments and introducing property taxes. The clampdown has since cooled the market gradually.

On a year-on-year basis, new home prices continued the downward trend, with 57 cities out of 70 seeing prices decline in June, expanding from 55 in May, the NBS data showed.

New home prices in 11 cities increased in June from a year earlier by less than 1.2 percent, compared with 15 cities in May.

Despite month-on-month rebounds in some cities, the government’s property controls have produced obvious results and effectively curbed the rising momentum of home prices, Ma said.

He urged continuing the property controls unswervingly and making it a long-term policy to curb speculative and investment demand.

Signs of a price rebound emerged over the last few weeks as buyers’ expectations budged, fearing that government efforts to support a softening economy will drive home prices up again.

Average home prices in 100 major cities edged up 0.05 percent in June from a month ago, ending a nine-month decline, data from the China Index Academy showed.

China’s economy expanded 7.6 percent year on year in the second quarter of 2012, the slowest growth since the first quarter of 2009.

Investment in the property sector, which directly accounts for about 13 percent of the gross domestic product, rose 16.6 percent year on year in the first half, down from 32.9 percent a year earlier.

The economic downshift prompted China’s central bank to cut benchmark interest rates for the first time since December 2008 in June and further slash the rates earlier this month.

The rate cuts reduced borrowing costs for home buyers, while market expectations shifted due to growing worries over price rebounds, thus causing home transactions and prices to increase in June, Ma said.

He also attributed the price rises to some developers canceling previous discounts as sales went up.

Central authorities have reiterated their firm stance on property market regulation many times this year.

The government must make unswerving efforts to ensure house prices return to reasonable levels and block a price rebound that would undermine the effects of previous efforts, Premier Wen Jiabao said earlier this month.

Xinhua