Ro­bust de­mand lifts home prices in June

China Daily (Canada) - - FRONT PAGE -

in stark con­trast to the volatil­ity of the eq­uity mar­ket dur­ing the past two weeks.

Since April, there has been a sus­tained im­prove­ment in both sales and prices af­ter the cen­tral gov­ern­ment low­ered the min­i­mum down pay­ment on sec­ond homes na­tion­wide at the end of March. The Peo­ple’s Bank ofChina, the cen­tral bank, an­nounced on Satur­day its latest cut in bench­mark in­ter­est rates, the fourth such move since Novem­ber.

The PBOC’s week­end cut of 0.25 per­cent­age point brought the bench­mark rate for loans of five years or longer, which is the ma­tu­rity of most mort­gages, to 5.4 per­cent. That is the low­est since at least 1991, and it is even lower than dur­ing the global fi­nan­cial cri­sis.

The pre­vi­ous cut on May 11 helped boost prop­erty sales.

The academy data showed new home prices strength­ened fromMay in 53 of the 100 cities it mon­i­tored, up from 48 cities a month ear­lier. The largest price in­crease (6.58 per­cent) was in Shen­zhen, the fastest monthly gain since the data se­ries be­gan in 2010.

Of the ma­jor 10 cities mon­i­tored, all saw price in­creases ex­cept for Chongqing and Guangzhou.

Prices of pre-owned hous­ing in ma­jor cities, which re­spond more swiftly to changes in sen­ti­ment, staged a more ro­bust up­turn. Shen­zhen again led the growth, with a whop­ping 8.59 per­cent gain, the fastest pace since 2011. Shang­hai rose 2.11 per­cent and Bei­jing rose 0.96 per­cent.

Prices in Shang­hai and Shen­zhen have al­ready re­cov­ered their ear­lier losses and are higher than a year ago.

In Bei­jing, sales of pre­owned homes in the first 28 days of June hit 16,086 units, up 5.8 per­cent from the same pe­riod ofMay and 170 per­cent higher than a year ear­lier, ac­cord­ing to Homelink, the city’s largest bro­ker of pre­owned apart­ments.

“We ex­pect down­ward pres­sure on home prices will con­tinue to ease grad­u­ally through 2015 as de­vel­op­ers man­age to re­duce their in­ven­to­ries. We ex­pect mod­est yearon-year growth of up to 5 per­cent in the value of na­tion­wide prop­erty sales over the next 12 months,” said a re­port by Moody’s In­vestors Ser­vice Inc. The rat­ings agency changed its out­look for the China prop­erty in­dus­try to sta­ble from neg­a­tive on June 1.

Driv­ing the re­cov­ery is con­sumers’ in­creas­ing will­ing­ness to buy homes. Aquar­terly house­hold sur­vey by the cen­tral bank showed in the sec­ond quar­ter, 14.7 per­cent of re­spon­dents said they planned to buy homes in the fol­low­ing three months, up0.9 per­cent­age point from the first quar­ter.

HU QING­MING / FOR CHINA DAILY

A mas­sive residential pro­ject in Yan­jiao, a town in He­bei province that borders Bei­jing. New home prices rose in 53 of the 100 ma­jor cities tracked by the China In­dex Academy in June, com­pared with the growth in 48 cities dur­ing May.

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