Housing Prices Rise in China for First Time in Months - New York Times

BEIJING â€" Chinese home prices broke eight consecutive months of decline in June in a tentative sign that pro-growth policies were gaining traction in the Chinese economy, now in its longest sequential slowdown since the global financial crisis.

The signs of a turn in the property market, which plays a big role in the Chinese economy, coincide with other data published recently that show the sequential rate of decline in the economy slowing after nine months of policy fine-tuning by Beijing that has included two cuts in official interest rates.

Prices were flat nationwide in June, compared with May, according to Reuters calculations of data from the National Bureau of Statistics that showed small increases of 0.3 percent and 0.2 percent, respectively, for Beijing and Shanghai.

The government put strict curbs on the property market more than two years ago to snuff out a speculative frenzy unleashed by China’s economic stimulus package of 4 trillion renminbi, or $585 billion at the time, after the 2008-09 crisis.

But the cooling off in real estate, a driving force in China’s demand for global commodities, has coincided with a further deterioration in global economic prospects.

Data last week showed that the economy had grown 7.6 percent from a year ago in the second quarter of this year â€" the slowest rate in more than three years. And world trade growth, to which China’s economy and factory sector are linked, has slowed sharply.

Beijing’s switch to a pro-growth policy stance since its “fine-tuning” program in the autumn of last year has seen it ease fiscal and monetary policies, speeding infrastructure spending and freeing an estimated 1.2 trillion renminbi, or $188 billion, for new lending through cuts to bank reserve requirements.

The government has stopped short of an outright easing of rules to curb property speculation, but policy tweaks by more than 30 local governments in the past few months have made it easier for people to buy homes.

Home prices, however, remain well beyond the reach of most middle-class families and Prime Minister Wen Jiabao has pledged repeatedly to pull the cost down to a “reasonable level,” though without defining what that level is.

The city authorities in Beijing sold a land parcel at a record high price of more than 40,000 renminbi a square meter, or $584 a square foot, in an auction last week, with the winning bid capped to keep it from going too high for what analysts consider to be Beijing’s last available plot for residential development.

The Communist Party is hypersensitive to discontent, especially before its once-a-decade leadership transition, due in the autumn of this year, a showpiece event that the government is determined will take place against a backdrop of social stability and economic prosperity.