China's June Home Prices Rebound as Sentiment Improves - Bloomberg

By Bloomberg News - 2012-07-18T02:17:41Z

China’s new home prices in June rose in the most number of cities tracked by the government this year as buyer sentiment improved after the central bank cut interest rates.

Prices climbed in 25 cities out of the 70 the government looks at and fell in 21 from a month earlier, according to data released by the statistics bureau today. The eastern city of Hangzhou led the gain with a 0.6 percent jump from May, while major cities Beijing and Shanghai recorded gains of as much as 0.3 percent. Home prices were unchanged from May in 24 cities.

The central bank cut the interest rates on July 5 for the second time in a month to spur economic growth that eased for a sixth quarter, expanding at the slowest pace in three years. Premier Wen Jiabao pledged over the weekend to intensify fine- tuning of policies to boost growth and has been tolerating minor forms of easing of some property curbs.

“Demand is picking up,” Nicole Wong, a Hong Kong-based property analyst at CLSA Asia-Pacific Markets, told Bloomberg Television. “The relaxation has come in terms of lower mortgage rates and lower mortgage rates for more cities. That’s been spreading.”

Among the major cities, Guangzhou and Shanghai both rose 0.2 percent from May, while Shenzhen decreased 0.1 percent. In May, prices declined in 40 cities month-on-month, while the record was in January when they dropped in 47 cities.

Data from private companies have also showed a pickup in the housing market. China’s home prices rose for the first time in 10 months in June, SouFun Holdings Ltd. (SFUN), the nation’s biggest real estate website owner, said on July 2.

While Wen has said he won’t waver from curbs to keep prices affordable, local governments have started easing some property policies. The eastern city of Yangzhou in May introduced home subsidies, Beijing allowed some discounts on mortgages for first-home buyers and Shanghai raised the tax threshold on purchases of some homes. About 30 Chinese cities have issued “fine-tuning” policies since the second half of 2011, according to Centaline Property Agency Ltd.

The southern business hub of Shenzhen may allow individuals to take loans against money in their public housing funds to buy first homes, according to a proposal posted on the Shenzhen Housing Provident Fund Management Center’s website on July 16. Individuals contribute money from salaries to their housing provident funds, which are held by the city.

Local governments that loosened property curbs or covered up the easing of measures on residential real estate must be stopped, while restricting speculative demand and investment in property must be made a long-term policy, the official Xinhua News Agency reported earlier this month, citing Wen, who was on an inspection tour in eastern Jiangsu province.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net