China new home prices rise faster in July

[BEIJING] Price rises for new homes in China accelerated in July from the previous month, a survey showed Monday, with some buyers possibly prompted by moves in some cities to curb prices.

The average price for new homes in 100 major cities increased 1.63 per cent month-on-month in June to 12,009 yuan (S$2,421.40) per square metre, the China Index Academy (CIA) said in a statement.

That was faster than June's 1.32 per cent.

Real estate is a key sector for China's economy, the world's second largest and a vital driver of global growth.

Some cities including the commercial hub Shanghai have introduced or hinted at policies to tighten the market after property and land prices surged in their localities, the CIA said.

The messages "have impacted on market expectations to some extent", it said, apparently indicating consumers rushed to buy.

Beijing has introduced several policies to try to revitalise the sector as economic growth weakened, including reducing minimum downpayment requirements, cutting transaction taxes and providing incentives for migrant workers to buy homes.

The policy loosening led prices in some big cities to rise this year as pent-up demand was unleashed. But at the same time the country has a huge inventory of unsold new homes, mostly in third- and fourth-tier cities.

The government has vowed to take "specialised" measures to tackle diverging trends in different regions.

"The overall home price in the 100 cities is expected to continue to rise steadily against the backdrop of policies to stabilise prices and control risks in multiple ways," said the CIA.

Year-on-year, new home prices in China gained 12.39 per cent last month, up from an increase of 11.18 per cent in June, the CIA said.

China's economy, beset by property market problems, a sluggish manufacturing sector and mounting debt, grew only 6.9 per cent in 2015, its weakest rate in a quarter of a century, and concerns about its health have roiled global markets.

AFP