Average home prices in 70 Chinese cities were flat in June from May, a government survey showed Wednesday, ending eight straight months of declines and offering yet another sign that the country’s real-esate market may have bottomed out.
The National Bureau of Statistics survey also showed prices rose in some cities as the number of transactions picked up following interest-rate cuts and government efforts to boost sales and stimulate the economy.
The figures go against repeated pledges by Premier Wen Jiabao and other government officials to keep residential property prices from rebounding.
Encouraged by cheaper mortgages after China’s central bank cut interest rates twice since June, home buyers have returned to the market in droves, and “pent-up demand from genuine home buyers and upgraders – as well as worries [by prospective buyers] that the market will rebound- sent prices in some cities higher in June over May,” said Ma Xiaoming, a statistician from the statistics bureau.
Some property developers have also canceled discounts as transactions increased, he added.
Based on Dow Jones Newswires calculations, prices in the 70 cities increased by a marginal 0.02 percent on average in June from a month earlier, compared with a 0.1 percent fall in May and a 0.25 percent decrease in April.
Prices fell 1.30 percent on average in June from a year earlier, accelerating from a 1.22 percent decrease in May and faster than the 0.94 percent decrease in April.
Meanwhile, prices of newly-built homes in 21 of the 70 large and medium-sized Chinese cities in the survey dropped in June on a sequential basis, the statistics bureau said, down from 43 cities in both May and April.
Prices of newly-built homes in major cities such as Beijing, Shanghai and Guangzhou, however, were slightly higher compared with May.
On a year-on-year basis, housing prices fell slightly faster as more cities posted weaker prices. Prices of newly-built homes fell in 57 of the 70 cities in June from a year earlier, more than the 44 cities in May.
Amid weakening economic growth – China’s gross domestic product growth slipped to its lowest quarterly level in over three years in the second quarter – the central government has been a bit more tolerant of local policies to prop up the real-estate market, though that tolerance has so far only extended to cities where the policies are designed to meet demand from first-time home buyers and to exclude speculators.
China’s real-estate market has been sluggish due to a two-year government campaign to curb runaway prices.
“The housing market seems to have benefited from a recent shift in macro policy toward easing,” J.P. Morgan Chase & Co. economists wrote in a note. ” Overall, we expect the housing market to gradually bottom out in the second half.”
But other analysts said it was too soon to say whether Beijing would stay the course.
“The government keeps sending signals indicating a preference and policies to push prices lower,” Credit Agricole CIB economist Dariusz Kowalczyk said in a note. “It remains to be seen how decisive policy makers are, given that economic growth has risen on the list of priorities.”
Also Wednesday, the state-run People’s Daily said China shouldn’t ease property controls despite the need to boost growth.
“Property tightening measures shouldn’t be loosened, and China needs to prevent the property sector from becoming a threat to the economy,” the newspaper’s overseas edition said in a commentary. “If China continues to rely on the property market to spur growth, it would be like drinking poison to relieve thirst.”