China’s June property investment, home prices pick up as economy averts a recession
- Property investment and sales post gain in June as China’s economy averts a recession last quarter
- Average home prices in 70 major cities increase 0.6 per cent from a month earlier
The property market has gained momentum in recent months supported by policy stimulus and as travel curbs to halt the spread of the coronavirus were lifted in most regions.
Some analysts expect the market to keep improving in the second half as infections fall, while others say a sustainable rebound may still be sometime away as consumer confidence remains soft and Beijing continues to crack down on speculation.
China’s economy, the world’s second-largest, grew 3.2 per cent in the second quarter, a separate government report showed today, the first major country to rebound from the damage caused by the pandemic. Gross domestic product shrank 6.8 per cent in the first quarter, the most since 1976.
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The world’s second largest economy had shrank by 6.8 per cent in the first three months of the year, the first contraction since the end of the Cultural Revolution in 1976. Real estate investment in June rose 8.5 per cent on year, compared with 8.1 per cent pace in May, according to Reuters calculations based on National Bureau of Statistics data published on Thursday.
For January-to-June, property investment returned to growth for the first time this year, rising 1.9 per cent better than a 0.3 per cent fall in the first five months.
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That comes as new construction starts measured by floor area increased 8.9 per cent last month, compared with May’s 2.5 per cent uptick.
“May and June’s data have shown the impact of the epidemic on real estate has passed, and the market will continue to heat up,” said Zhang Dawei, a Beijing-based analyst with property agency Centaline.
However, funds raised by China’s property developers declined 1.9 per cent in the first six months. They fell by 6.1 per cent in the first five months.
Residential prices also showed signs of recovery.
Average new home prices in 70 major cities tracked by the bureau rose 0.6 per cent in June from the prior month, according to Reuters’ calculations. It was the fastest pace since July 2019, with more cities registering higher prices from the previous month.
On an annual basis, home prices expanded 4.9 per cent in June, matching the pace in May.
Shenzhen toughens local residency requirements to douse ‘violent surge’
While the Chinese government has refrained from strong easing in the property market, measures to boost credit and cut interest rates have seen a rebound in mortgages and demand for consumer loans.
Centaline’s Zhang said looser credit and easier access to obtaining residency – which helps out-of-towners get around purchase curbs – were largely behind the recovery.
Major cities including Hangzhou, Ningbo and Shenzhen imposed new restrictions on property transactions this month to arrest sharp price rises and douse speculation.
