China's June home prices pick up, property investment grows

Beijing

CHINA'S real estate investment grew faster in June than May, helped by more robust construction activity and easier credit, as policymakers focused on getting the economy back on its feet after the virus outbreak.

The property market, a crucial pillar of growth in the world's second-largest economy, has gained momentum in recent months supported by policy stimulus and as travel curbs to halt the spread of the coronavirus were lifted in most regions.

However, analysts say a sustainable rebound may still be some time away as consumer confidence remains soft and the government continues to crack down on speculation.

Real estate investment in June rose 8.5 per cent from a year earlier, compared with 8.1 per cent growth in May, Reuters calculations based on data from the National Bureau of Statistics on Thursday showed.

For the first six months of the year, property investment returned to growth for the first time this year, rising 1.9 per cent, better than a 0.3 per cent fall in January-May.

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That comes as new construction starts measured by floor area increased 8.9 per cent last month, compared with May's 2.5 per cent uptick.

Funds raised by China's property developers fell 1.9 per cent in the January to June period, narrowing from a 6.1 per cent drop for the first four months of 2020.

However, property sales by floor area rose slightly less in June with an increase of 2.1 per cent, down from a 9.7 per cent growth in May.

Property prices also showed signs of recovery. China's average new home prices in 70 major cities rose 0.6 per cent in June from the prior month, quickening from 0.5 per cent growth in May.

It was the fastest pace since July 2019, when it grew 0.6 per cent, with more cities registering higher prices from the previous month. On an annual basis, home prices expanded 4.9 per cent in June, matching the pace in May.

China's home prices are expected to grow slightly faster this year than predicted a few months earlier, but sales will stay soft as Beijing remains wary of overheating risks in the real estate sector.

The government has refrained from strong easing in the property market to cushion the slowdown, although measures to boost credit and cut interest rates have seen a rebound in mortgages and consumer loans.

Major cities including Hangzhou, Ningbo and Shenzhen have imposed new restrictions on property transactions earlier this month in order to arrest sharp price rises and curb speculation. REUTERS