Home sales in some second-tier cities rebound

High inventories will prevent nationwide increase in prices, say experts

Home sales in some second-tier cities saw a sudden recovery in July from the previous month, after the local governments relaxed or canceled home purchase limits, data from a real estate research institute showed Monday.

But analysts said Monday that the sales growth is unlikely to cause a rebound in home prices nationwide due to heavy inventories.

Total sales areas for newly built apartments in 42 major cities surveyed witnessed a 9.6 percent month-on-month increase in July, compared to a 14 percent month-on-month drop in June, according to data from real estate research institute China Index Academy (CIA) e-mailed to the Global Times Monday.

The number of cities reporting a month-on-month sales increase in July stood at 29, while 28 cities reported monthly sales decreases in June, the CIA data showed.

Among all of the 42 major cities, Ji'nan, capital of East China's Shandong Province, which canceled its home purchase restrictions on July 10, saw the biggest growth of 142.18 percent in home sales in July compared with June, according to the CIA.

Sales areas of newly built apartments in Chengdu, capital of Southwest China's Sichuan Province grew by 64.68 percent in July month-on-month.

Chengdu was reported to have canceled its home purchase limits since mid-July although its housing authorities have not officially confirmed the decision, according to local media reports.

Hangzhou, capital of East China's Zhejiang Province, which officially announced to relax its home purchase limits on July 29, saw its home sales areas rise by 34.4 percent in July compared with the previous month.

Although the home purchase restrictions have been officially withdrawn by the Hangzhou housing department at the end of July, the sales of some luxury apartments began to see an obvious rise since mid-July, prompted by rumors of possible cancellation of home purchase limits, local media reported.

"The rebound in sales areas in some second-tier cities was mainly because the dampened demand was suddenly released in the market right after the cancellation of home restrictions," Ma Yabo, an analyst at CIA, told the Global Times Monday.

The downward trend in the property market of some cities like Wenzhou in Zhejiang, where home purchase restrictions have been cancelled, still has not reversed, mainly due to "the small room for growth in demand and high inventories of apartments," Yang Hongxu, vice president of Shanghai-based E-house China R&D Institute, told the Global Times on Monday.

Home sales area in Wenzhou declined by nearly 18 percent in July month-on-month, according to the CIA.

Yang said a sudden rebound in home prices nationwide is unlikely, and an upturn in home sales nationwide may not happen in a short term due to heavy inventories.

Meanwhile, more second- and third-tier cities are set to ease their home purchase limits, according to Yang.

The housing security and real estate management bureau of Taiyuan, capital of North China's Shanxi Province, withdrew its home purchase limits Monday, Shanghai Securities Journal reported.

As of Monday, only about 10 out of the 42 cities monitored have not relaxed or cancelled their home purchase limits, according to local media reports.

The four first-tier cities - Beijing, Shanghai, Guangzhou and Shenzhen - are not likely to relax their home purchase limits before the end of this year because of the large demand for homes in these cities, according to Yang.