China’s home prices rise month-on-month in July

New home prices rose month-on-month in 50 cities out of the 70 monitored major Chinese cities in July, up from 25 in June, the National Bureau of Statistics (NBS) said Saturday.

The biggest price increase occurred in Shijiazhuang, capital of North China's Hebei province, where the average new home price rose 0.7 percent over June. The price tag in Beijing rose 0.3 percent but stayed flat in Shanghai and Shenzhen.

Nine cities recorded declines in new home prices last month, down from 21 in June, while prices in 11 cities remained unchanged, according to the NBS data.

For secondhand homes, 38 cities posted a month-on-month rise, compared to 31 in June. The largest growth rate was 2.2 percent, compared to 1.1 percent in June.

Although prices had been climbing since June, the figures were still generally lower than a year ago. Fitty-eight out of the 70 cities enjoyed price declines in July, up from 57 in June and the 11 cities that saw year-on-year growth posted increases of less than 1 percent, while one city saw its new home prices remain the same compared with one year ago.

NO SHARP REBOUND EXPECTED

"From a national perspective, the trend of rises in both transaction amount and price is basically over now," said Hu Jinghui, vice-president of 5i5j Real Estate.

Gu Yunchang, vice-president of the China Real Estate Association, also said the price will be stabilized in the coming months.

"The result (of July) falls within my expectation: mild month-on-month growth and a slight year-on-year drop," said Gu. "It was a sign of stabilization, rather than the beginning of a violent rebound."

"The gains have so far been very mild," said CIMB analyst Johnson Hu, adding that he doesn't expect a nationwide sharp price increase, as the Chinese central government has made it very clear that it would launch more tightening measures if it sees such a trend.

In some cities, prospective home buyers that chose to wait due to a tightening market started rush-buying following two interest rate cuts in June and July.

"It's still a little early to determine whether this momentum will be sustained," said Mark Budden, China Area Leader at EC Harris, a leading global built asset consultancy.

With a number of tightening measures still in place and property taxes increasing in certain cities, robust growth in home prices is unlikely in the short-term, Budden said.

REGULATIONS CARRIED OUT WELL

China has taken various measures since 2010 in an effort to bring down the skyrocketing home prices in the red-hot property market. The government has restricted home purchases in several cities while requiring higher down payments and introducing property taxes.

The State Council, China's Cabinet, sent eight teams across the country to monitor local authorities' implementation of property curbs, and the result, released in a statement late Friday, showed that these measures have been "carried out well" and speculative housing demand has been curbed.

The inspection further indicated the central government's determination to cool the property market, and the central authorities will improve regulation on the basis of the results, said the statement.

New price-control measures may soon hit China's property market, which has just begun to show signs of a rebound following government measures to stimulate the slowing economy, analysts and industry insiders said.

Senior Chinese leaders have repeated pledges to continue the country's property tightening measures despite the slowdown in national economic growth.

The country's economy expanded 7.6 percent year on year in the second quarter. The worst performance in more than three years came amid global economic instability and uncertainties, especially the eurozone debt turmoil.