Home price rises in most Chinese cities slow in July

Prices of homes in most of the nation's cities are still on the rise, but their month-on-month gains continue to narrow.

The National Bureau of Statistics released data on Sunday indicating that new home prices in 62 of the 70 cities it tracks registered month-on-month increases in July, while four remained unchanged and four showed declines.

On an annual basis, prices in 69 cities rose in July, though Wenzhou, Zhejiang province, was the only city to report a drop. In the secondary market, 57 cities out of 70 saw prices of pre-owned homes rise in July compared with June, and 67 posted year-on-year increases in pre-owned home prices in July.

Liu Jianwei, a senior statistician at the NBS, said the rising residential property prices were driven by multiple factors, including rigid demand and recent hikes in land prices.

Month-on-month growth of new-home prices in Shenzhen narrowed by 0.8 percent, in Shanghai by 0.3 percent and in Beijing by 0.1 percent.

Twenty-five cities saw their used home prices grow at a slower pace than in June. Beijing's pre-owned-home prices rose by 1.4 percent from the previous month, becoming the only city to show monthly growth of more than 1 percent.

Lu Qilin, research director at Shanghai Deovolente Realty Co, said the slower month-on-month growth pace is in line with market expectations.

"Home prices have reached a comparatively high level after a period of fast growth in the first half of the year, and homebuyers are becoming more prudent in signing purchase deals," said Lu.

Hui Jianqiang, research director of Beijing Zhongfang-yanxie Technology Service Ltd, said the slower month-on-month growth rate was mostly the result of seasonal variations.

"July and August are the traditional low season for property transactions, and developers will slow down the pace of sales during these two months," said Hui.

Wenzhou continues to be the nation's only major city to see a drop in new-home prices from a year ago.

"The depressed figures of the city's residential property market can partly explain why local government has loosened its grip on home purchases," said Lu.

Wenzhou housing authorities quietly tweaked purchase restrictions recently by permitting local residents and non-local households to buy second homes.

Analysts said that central government is shifting from policy curbs to a more market-oriented mechanism in the property market.

Chen Huai, director of the China Urban-Rural Construction and Economic Research Institute, affiliated with the Ministry of Housing and Urban-Rural Development, said at a property forum in Boao, Hainan province, that the government used to have a policy of using administrative measures to rein in the property market but this was not conducive to the market's allocation of resources.

"Our control measures are mainly restrictions on purchases, price rises and obtaining bank loans," Chen said.

Chen suggested the focus be shifted to balanced development among top-tier cities and second- and third-tier cities. "If we cannot narrow the development gap among the cities, the runaway housing prices in the major cities won't be reined in," Chen said.