Mainland home sales highest since 2009 on falling interest rates
Buoyed by an overall improvement in sentiment and two interest rate cuts this month, home sales across the mainland have risen to a three-year high.
Transactions in 10 major cities monitored by the China Index Academy totalled 6.5 million square metres in the first three weeks of this month, the highest since 2009.
A study of 54 cities by Centaline China indicated 229,035 flats were sold, up 72 per cent from a year ago.
David Zhang, director of research at Centaline China in Beijing, attributed the strong sales to more than 40 cities slightly easing curbs on the property sector, so as to fuel buying interest.
'Better performance will be achieved in the second half of this year,' Zhang said, pointing out that the peak season for property sales normally occurred in September and October. For the whole of July, he believed 280,000 flats would be sold.
Homebuyers' confidence was strengthened by the People's Bank of China reducing interest rates twice early this month.
'The latest two cuts in mortgage rates have given a big boost to the property market,' Zhang said.
Home prices in 70 cities registered month-on-month growth, although just 0.02 per cent, last month, prompting the central government to send out inspectors to check local enforcement of existing curbs on home purchases and local supply in 16 provinces and municipalities.
The China Banking Regulatory Commission said last night it would 'decisively' enforce the government's property curbs in the second half of this year and enhance risk management of real estate lending.
Tony Tsang, a property analyst at Deutsche Bank, wrote in a research note that 'more tightening measures are unlikely, as the central government's primary target should be to ensure that local governments effectively implemented the current tightening measures rather than introduce new ones'.
Tsang said: 'We believe that the central government should be satisfied if the rising momentum of home prices is curbed.' He said mainland developers would release more projects in the second half.
'We believe the listed developers will remain flexible on price cuts, which should support the current sales momentum,' Tsang said.
Last week, the National Bureau of Statistics, which monitors property price movements in 70 major cities, said prices of new homes fell in 21 cities last month, about half the 43 cities in the previous month.
Prices rose in 25 cities, but the increase was less than 0.6 per cent. The average prices in the remaining 24 cities remained flat; the figure was 21 in May.