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China's home prices continue to ease upward

Publication Date : 19-08-2012

 

In July, new home prices rose month-on-month in 50 out of the 70 monitored large and medium-sized Chinese cities, up from 25 cities in June, the National Bureau of Statistics said yesterday.

The number of cities that registered a decline in home prices dropped from 21 in June to nine in July, the bureau said.

The biggest price increase occurred in Shijiazhuang, capital of North China's Hebei province, where the average new home price rose 0.7 per cent over June. The price tag in Beijing rose 0.3 per cent but stayed flat in Shanghai and Shenzhen.

For second-hand homes, 38 cities posted a month-on-month rise, compared to 31 in June. The largest growth rate is 2.2 per cent, compared to 1.1 per cent in June.

Although prices have been climbing since June, the figures were still generally lower than a year ago. Fifty-eight out of the 70 cities enjoyed a lower average price than a year ago, and those that saw year-on-year growth posted increases of no more than 1 per cent.

"From a national perspective, the trend of rises in both transaction amount and price is basically over now," said Hu Jinghui, vice-president of 5i5j Real Estate.

Gu Yunchang, vice-president of the China Real Estate Association, also said the price will be stabilised in the coming months.

"The result (of July) falls within my expectation: mild month-on-month growth and a slight year-on-year drop," said Gu. "It was a sign of stabilisation, rather than the beginning of a violent rebound."

But house sales in June and July, a traditional offseason, hit a record high. Following a record sales high of 261,000 house units in June, sales in July gained another 7 per cent nationally, Centaline Beijing's data shows.

Gu said this is a result of State policies, industry promotion and the public's changing expectations.

To spur a slowed economy, the central bank cut the country's interest rates in June and early July. Meanwhile, cash-strapped developers tried to reinvigorate slow sales with promotional pricing. And various local governments have adopted "fine-tuning" policies to make purchases more attractive.

However, to control expectations and prevent a rebound in prices, various central regulators have repeated pledges to keep the property-purchase limit firmly in place, and the State Council sent eight teams to 16 municipalities and provinces to inspect how well the policies are being enforced.

As the inspection finished, an announcement was made by the team recently, in which the State Council urged local governments that have shown a tendency to loosening the house policies to "rectify behaviours immediately", stressing local governments are not allowed to loosen the curb under any cover.

But it fell short of rolling out any concrete tougher measures, such as the expansion of pilot cities that impose a property tax, as many in recent days have called for. Industry experts estimated it would not do so in the next months as long as home prices do not rise dramatically.

"The sales stay brisk and the price grows mildly. It seems it is the scenario that all parties can accept," Gu said.

 

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