10 Chinese cities post first unanimous month-on-month gains in new home prices
Shenzhen leads gains as housing market recovery takes hold
New home prices in 10 major Chinese cities tracked by the SCMP-Creda index posted a unanimous month-on-month rise in June for the first time in its 18-month history.
The gains were led by Shenzhen at a pace of 5.33 per cent, with Hangzhou at the bottom with an increase of 0.05 per cent, according to the monthly index, a collaboration of the South China Morning Post and consultancy China Real Estate Data Academy.
In May, Guangzhou, Wuhan and Chongqing still suffered a drop in prices from April.
"Home prices are expected to show a structural increase [in the second half], with stronger performance in first-tier cities," said Chen Sheng, the academy's dean.
"With the market now recovering, developers will gradually eliminate sweeteners in cities with lower inventory pressure."
Shenzhen's new home sales hit an eight-year high last month at 893,500 square metres, up 33 per cent from May. Sales in Beijing also jumped 32 per cent to 1.03 million sq metres. But volume fell in Wuhan, Chongqing, Hangzhou and Chengdu by low single-digit percentages month on month. The combined sales in the 10 cities grew 4.15 per cent from May.
"After a big surge in May, demand seemed to be fading in June," Chen added. "However, developers pushed out more supply and increased marketing efforts in their last-ditch attempt to boost performance in the first half."
The academy said sales in the second half would be better than in the first six months as local governments and banks would implement measures already announced to help sustain a recovery in the market, which is vital for China to hit its 7 per cent growth target this year.
A property recovery helped maintain gross domestic product growth at 7 per cent in the second quarter, beating forecasts of 6.8 per cent.
In year-on-year terms, new home prices still fell in four cities last month, including Hangzhou and Guangzhou, but the declines narrowed to low single digits.
Shenzhen again led the gainers with an 8.3 per cent rise. Shanghai, Beijing, Wuhan, Tianjin and Chengdu also posted growth.