China's property market climbs for second month in a row
Prices for new homes climb 0.4pc in June, a sign key sector of economy is bottoming out
Home prices on the mainland rose for a second month in a row in June, on a monthly basis, indicating that government efforts to boost the struggling property sector have started to gain traction.
Average new home prices rose 0.4 per cent in June versus May, according to calculations from official data published yesterday. That was a faster gain than the 0.2 per cent rise in May, the first monthly increase since April, 2014.
The second month of rising prices is a sign of bottoming out for one of the country's key sectors and should ease fears of a sharp slowdown in the economy.
On Wednesday, China reported annual growth of 7 per cent in the second quarter of the year.
A mild recovery in the market could be welcomed by the government as long as it does not turn into a swift rebound, which would risk of rekindling property bubbles.
Sheng Laiyun, spokesman of the National Bureau of Statistics, said on Wednesday the property sector had shown marked improvement in the second quarter, boding well for the broad economy.
Still, high inventories of unsold homes have weighed in most small cities and developers have slowed the pace of construction, underscoring the unlikeliness of a quick recovery in the property market this year.
"There are many Chinese cities sitting on a sizeable inventory of unsold homes. It's not easy for home prices to be up in those cities," said Liu Yuan, head of research at property consultant Centaline in Shanghai.
Official data this week showed unsold floor space totalled 657.4 million square metres at the end of June, up 20.8 per cent from the same period a year ago.
The government in the past few months has relaxed tax rules and cut downpayments for second-home buyers.
The government's pro-growth policy, which has included four cuts to benchmark interest rates since November, also helped boost property sales and change market sentiment.
With sales rebounding and homebuyers turning more optimistic about the market, some developers have started to raise prices.
An executive at property company CIFI said this month it was planning to raise prices by 10 per cent in the second half, while Country Garden said it saw room to lift prices for some projects.
The bureau's data showed home prices fell 4.9 per cent in June on an annual basis, the 10th consecutive annual fall, but at a slower pace than the 5.7 per cent dip in May.
Home prices rose month-on-month in 27 of the 70 major cities monitored, up from 20 in May, bureau data showed.
Prices in the wealthiest cities led the gains with most third-tier cities still seeing prices falling, highlighting a growing divide in the market.
"There is relatively strong housing demand and transactions in the first-tier cities, where home price gains are much higher than those in second and third-tier cities," Liu Jianwei, a senior statistician at the bureau, said in a statement accompanying the data.
Shenzhen was the top performer, recording the third consecutive month of rebound, up 15.7 per cent in June from a year ago, following a 7.5 per cent rise in May.
Shanghai's prices also swung into positive year-on-year growth, rising 0.3 per cent in June and reversing a drop of 2.3 per cent in May.
