Property prices rally, continuing controls reaffirmed

BEIJING - After nine consecutive months of month-on-month declines, property prices in China rallied in June, but a subsequent surge is unlikely because the government has reaffirmed continuing market controls, analysts said.

Housing prices in 100 surveyed Chinese cities rose 0.05 percent in June from May, data from the China Index Academy showed. The average housing price in these cities stood at 8,688 yuan ($1,380) per square meter last month, down 1.9 percent year on year, the data showed.

Meanwhile, the average home price in the country's top 10 cities, including Beijing and Shanghai, reached 15,429 yuan per square meter last month, up 0.75 percent from May.

The pick up was driven by demand from first-house buyers, many of whom are eligible for affordable housing purchases, so the demand will soon be met with more affordable housing available in the market, according to Hu Jinghui, vice-president of a real estate agency in Beijing.

Chinese Vice-Premier Li Keqiang has called for more efforts to carry out the government's ambitious plan of building millions of affordable housing units and urged continuing curbs on speculative demand in the real estate sector - the latest signals sent by authorities that market controls will not be relaxed.

At a recent conference on low-income housing projects, Li demanded "zero tolerance" for quality problems in affordable housing projects as well as a fair distribution of affordable housing units to ensure that the units go to low-income families.

Since 2010, China has implemented a raft of measures to rein in runaway housing prices, including restrictions on home buyers, higher down payments, property tax trials and the construction of low-income housing.

As China's economy has slowed, there have been growing concerns that the country's overall growth would be impacted if China's housing prices fall too much and too soon.

However, several central government departments, including the central bank and the housing regulator, last month dampened expectations for measures to ease property controls, saying their policies on the sector would not change.

Zhang Dawei, a property market analyst with Centaline Property, forecast that property prices may bottom out in August and peak afterward, as authorities may loosen credit controls to stimulate economic growth.