Mainland home prices extend rebound

New home prices on the mainland rose last month for a fourth consecutive month as a rebound in property sales eased developers' funding woes, according to SouFun Holdings.

Prices rose 0.17 per cent from August to 8,753 yuan (HK$10,716) per square metre, the real estate website said, based on its survey of 100 cities. Kunshan, in Jiangsu province, had the biggest gain, with prices rising 2 per cent.

Home prices have reversed declines since June after the central bank cut interest rates to stem an economic slowdown and some local authorities eased restrictions as land-sale revenues fell. Beijing has pledged it will not waver from curbs, including home-purchase restrictions.

"Developers' incentives to cut prices are gradually dissipating as sales recover this year," said Zhao Zhenyi, an analyst at Industrial Securities. "But there's no strong momentum for price gains because inventories are growing with new projects coming in."

Developers' credit outlook improved as the recovery in prices eased liquidity pressures and a slowing economy limited the authorities' incentive to further tighten policy, Standard & Poor's said last month. The credit rating company may "see some positive rating actions" in the next six months as defaults by so-called distressed developers are less likely after asset sales.

The government has raised down-payment and mortgage requirements in its more than two-year effort to curb the property market. It also imposed a property tax for the first time in Shanghai and Chongqing, increased construction of low-cost housing and enacted home-purchase restrictions in 40 cities.