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Home-price growth weakens in China as wider curbs kick in
HOME-PRICE growth in China weakened for the first time since February after authorities widened curbs to tamp down a market that was re-inflating.
New-home prices, excluding government-subsidised housing, increased just 0.66 per cent on average in June from May in 70 major cities tracked by the government, data released by the National Bureau of Statistics showed on Monday. That's slightly slower than a 0.71 per cent advance a month earlier and compares to a 0.62 per cent gain in April.
Home sales for the month of June were relatively stable, gaining slightly faster by value but slower by area, separate data out on Monday showed.
Investment in property development, an indicator of demand for everything from steel to home appliances, expanded at a faster 10.1 per cent in June versus 9.5 per cent in May. The moderation follows a solid upswing in the previous three months. Officials walk a tightrope when it comes to property in China, wanting to keep a lid on housing prices, yet at the same time keep the property market strong enough to support a slowing economy.
"A turning point may have emerged," said Ding Zuyu, co-president of property consultancy E-House. "Even though some cities appear red-hot, the overall market is still under pressure."
The softness may not be the end of local government curbs, however. Authorities have the ability to fine tune policy on an individual city or town basis should they wish. Last month, Xi'an cracked down on who could buy property in the city after home values surged a nation-leading 2 per cent in May.
While weaker price growth may tempt buyers and investors to wade in, developers are already under pressure from an array of measures aimed at curtailing their fundraising activities.
June's smaller increase was largely due to weaker figures from less-developed Tier 3 cities, where price growth slowed to 0.58 per cent as support from the central bank for shanty-town renovation projects evaporated. Home-price growth also weakened in the biggest Tier 1 cities, with values up just 0.25 per cent, the slowest rise in three months.
Tier 2 cities continued to show strength, with prices accelerating 0.8 per cent, the fastest in seven months. Many of these cities have loosened requirements to gain residency permits, a prerequisite to buy property in the various cities.
The biggest gains - at 2.5 per cent - were in Luoyang, one of the biggest cities in Henan province. BLOOMBERG