Prices of new homes in China’s major cities up

Housing fair: Visitors attend the annual summer housing fair in Shanghai recently. Guangzhou and Shenzhen led price rises in July while prices in Shanghai saw an annual decline of 0.1%. – EPA

BEIJING: Average new home prices in 100 major Chinese cities rose 0.2% in July from the previous month to 8,874 yuan (US$1,380) per sq m, with growth slowing slightly under the influence of official policy tightening, a private data provider said on Monday.

But the index compiled by China Real Estate Index System (CREIS), which is affiliated with China's largest online real estate company Soufun Holdings Ltd, showed July prices were up 6.8% from a year earlier, compared with June's 5.2% gain.

The data gives a snapshot of housing inflation, a main driver of rising consumer prices, before Beijing releases its official data on the 18th each month.

“Some developers have started to cut prices quietly and more will do so in August,” said Ge Haifeng, deputy managing director in charge of index research at CREIS.

“With supply rising in September and October, Chinese developers will face more downward pressure,” he said.

“They need to reach their annual sales targets.”

The 0.2% rise in prices in July from the previous month compares with June's monthly gain of 0.4%.

In line with Beijing's tougher crackdown on property speculation in major cities, property inflation was more buoyant in smaller cities in July.

New home prices in the top 10 Chinese cities rose 3.9% in July from a year earlier, but stayed roughly the same in month-on-month terms.

Among the top 10 cities, the southern cities of Guangzhou and Shenzhen led price rises in July, with annual growth of 10.1% and 10% respectively, while prices in Shanghai saw an annual decline of 0.1%, it said.

China has rolled out measures, including credit controls and purchase restrictions, to cool home prices and curb speculation as part of an effort to check inflation.

Beijing last month expanded purchase restrictions in second and third-tier cities, further dimming the real estate sector's outlook and boosting expectations for price falls in the rest of the year.

A slowdown in the property sector would come just as the country's broader economy eases.

Separate surveys published on Monday indicated the factory sector struggled with the weakest activity in 28 months in July as manufacturers grappled with credit shortages and softening global demand.

By Reuters