China new home prices post biggest gain in over a year

[SHANGHAI] China's new home prices posted the biggest gain in more than a year, signalling a turning point for the nation's property market, according to SouFun Holdings Ltd, the country's biggest real estate website owner.

Home prices last month rose 0.3 per cent from June to 8,717 yuan (S$1,714) per square metre, SouFun said in a statement yesterday, based on its survey of 100 cities. That was the second monthly gain and the biggest rise since June 2011.

China's Premier Wen Jiabao said China will "unswervingly" implement property controls and prevent home prices from rebounding, the official Xinhua News Agency reported on Tuesday, citing a government meeting held on July 26.

Home prices had been declining after the government placed restrictions on the number of properties people could buy in about 40 cities and raised downpayment requirements.

"It is very clear that China's property market is coming back," Vincent Mo, chairman of SouFun, told Bloomberg Television yesterday.

The back-to-back monthly gain "showed the turning-point of China's property prices", he said.

A gauge tracking property shares on the Shanghai Composite Index rose 0.3 per cent at the close to the highest since July 25.

China sent eight teams to 16 provinces late last month to check on the implementation of its property curbs, according to a statement on the central government website last week.

The nationwide check is aimed at "firmly" restraining property speculation and consolidating results of the curbs, it said.

"It's very difficult to expect the government's policies to ease while home prices keep rising," said Jack Gong, a Hong Kong-based property analyst at Jefferies Group Inc.

"The policies in general are still tight, but there's a lot of uncertainty in the fourth quarter."

The central bank cut interest rates on July 5 for the second time in a month to spur economic growth, which eased for a sixth quarter in the three months to June 30.

China's home sales rose the most this year in June, increasing 41 per cent from May to 531.3 billion yuan, according to the statistics bureau data.

The recovery in China's real estate sector appears to have already started, Standard Charted Plc economists led by Lan Shen said in a report yesterday. "It will be a long, hard slog back to boom," they said after surveying 30 developers.

"The majority of developers expect central government policy to remain unchanged, but for local governments to continue, quietly, doing their own thing."

China's eastern export city of Yiwu has lapsed home purchase restrictions since the beginning of the year and new policies to curb home buying have yet to be introduced, China Securities Journal reported yesterday, citing unidentified people.

Home prices rose in 70 cities last month from June, the most since July last year, according to Sou- Fun's statement.

Among the major cities, Chongqing in the western region led gains with a 1.6 per cent increase from June, while Beijing and Shanghai both added 0.03 per cent.

China's home prices will be little changed for the rest of the year as the government isn't likely to tighten or ease its property curbs, according to SouFun's Mo. - Bloomberg