Steady growth in China's new home prices boosts economic recovery

Beijing

NEW home prices in China rose at a slightly faster monthly pace in August, as consumer demand showed signs of picking up in a boost to an economy recovering from the coronavirus crisis.

Average new home prices in 70 major cities climbed 0.6 per cent in August from a month earlier, a touch better than a 0.5 per cent increase in July, Reuters calculations showed, based on data released by the National Bureau of Statistics (NBS) on Monday.

On an annual basis, home prices rose 4.8 per cent in August, matching July's pace.

The property market has been a major driver in China's economic recovery, with home sales and investment growing at a robust pace in recent months after coronavirus lockdowns were lifted.

Yet policy makers remain wary about the risks of overheating, long one of the key balancing acts for authorities as they try to support a crucial sector of the economy without stoking excessive speculation.

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Since July, many major cities have imposed new restrictions on property transactions to arrest sharp price rises. Big provincial capitals Hangzhou and Shenyang also strengthened curbs on home purchases this month.

Most of the 70 cities surveyed by the NBS reported monthly price increases for new homes, with the number unchanged from 59 in July.

Tier-3 cities reported the strongest monthly gains. Huizhou, a small city in China southern Guangdong province which is close to Shenzhen, was the top performer in August, notching up a monthly price increase of 1.9 per cent.

Regulators said last month they would institute new rules to control liquidity in the real estate market and are looking to contain property developers' debt levels to reduce risks to the financial system.

That has prompted indebted developers to cut prices to spur sales and cash flow.

Analysts expect more developers will initiate sales promotion in the coming months, dubbed "Golden September, Silver October", a traditional sales peak season.

"Going forward, price cuts and sales promotion would be the main theme," said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution. "We do not rule out possibility that the home price increase will continue to narrow." REUTERS