China new home prices rise in June: survey

[BEIJING] China's new home prices increased in June for the second straight month, a survey showed Tuesday, as official stimulus policies helped boost the market.

The average price of a new home in China's 100 major cities rose 0.56 per cent month-on-month to 10,628 yuan (US$1,714) per square metre, the China Index Academy (CIA) said in a report.

The result comes on the heels of a 0.5 per cent gain in May, the first increase in four months. Prices fell for eight consecutive months to December last year.

Authorities have taken steps to support the stagnating property market in the form of interest rate cuts and other measures, which CIA cited as helping to boost demand and "accelerate recovery in the market".

The central People's Bank of China announced on Saturday its latest cut in benchmark interest rates, the fourth such move since November, and has taken other measures such as easing mortgage policies.

In late March it lowered minimum downpayment levels on second homes nationwide, rolling back a four-year-old policy introduced to rein in soaring prices that were making home ownership unaffordable for many and raising worries over social unrest.

The central bank also shortened the ownership period during which sellers are liable to a 20-per cent capital gains tax on properties other than their main home.

China's gross domestic product grew 7.4 per cent last year, the weakest rate in nearly a quarter of a century, and more recent indicators have pointed to the frailty extending into the second quarter.

Real estate investment remains a key driver for the world's second-largest economy, while land sales are a major source of revenue for cash-strapped local governments.

On a year-on-year basis house prices fell 2.70 per cent in June compared with a decline of 3.73 per cent in May, according to the CIA.

The average price in China's top 10 cities was 19,357 yuan per square metre, down 0.82 per cent from a year earlier - slowing sharply from a fall of 2.33 per cent in May.

AFP