Home Prices in China Rise Slightly in August - New York Times

BEIJING â€" Home prices in mainland China rose 0.1 percent in August from July levels, according to data released Tuesday, a modest month-on-month increase for a second consecutive month and a signal of a gentle recovery in the property market as the government seeks to bolster economic growth.

Real estate, which directly affects about 40 other business sectors in China, is a major driver in the Chinese economy, which is going through its worst slowdown in three years as growth in exports and factory output slows.

Any signs of a strong recovery in home prices could increase market uncertainty about whether Beijing will try to stifle property prices further through controls, including sales restrictions and a new tax.

Despite the wider economy’s problems, the government has attempted for two years to cool an overheated property market to soothe discontent among middle-class Chinese, who are increasingly priced out of the urban housing market.

The ruling Communist Party is particularly concerned about quelling disquiet before its once-a-decade leadership change, which is scheduled for this autumn, a showcase event that the government would prefer to take place against a backdrop of rising prosperity and social stability.

“China is more likely to tighten policy, probably expanding the property tax beyond Shanghai and Chongqing in the fourth quarter to other first- and second-tier cities where home prices are rising fast,” said Shi Qi, a property analyst at CEBM, a private research house in Shanghai, referring to the largest mainland cities.

Compared with a year ago, Chinese home prices were down 1.4 percent in August, the sixth month that prices had been below the year-earlier period, according to Reuters calculations based on National Bureau of Statistics data released Tuesday.

Home prices rose month-on-month in 35 of 70 major cities monitored by the bureau in August, down from 49 in July. That was most likely the result of recent efforts to tighten property policies.

Home sales rose this summer as the Chinese government made it easier for buyers to gain access to mortgage credit and as some cities made policy tweaks to bolster local property markets.

A Shanghai stock index of property companies fell 3.8 percent Monday after the city of Nanjing was reported over the weekend to have reintroduced housing price controls, raising the risk that other cities would follow suit.

The index moved upward after the government property data were released Tuesday, having touched an intraday low of down 0.6 percent in early trade.

Official figures on Sept. 9 showed the volume of Chinese property sales in value terms increased 20.4 percent in August from a year earlier, easing from a rise of 26.3 percent in July, but still keeping a double-digit growth pace.

Annual real estate investment growth increased to 17 percent in August from a 9.6 percent rise in July, reinforcing signs of a recovery in the sector.