SHANGHAI?New home prices in major Chinese cities rose strongly in June compared with a year ago, according to an analysis of official data released Thursday, but the market is also showing signs of moderation following last month's government-led liquidity squeeze.
Prices rose an average of 6.12% in June compared with a year earlier, according to Wall Street Journal calculations based on data released by the National Bureau of Statistics on 70 large and medium-size Chinese cities. Prices rose in 69 of cities in June compared with a year earlier, unchanged from May.
The result marks the latest pickup in the pace for home-price appreciation on a year-to-year basis?prices rose 5.32% in May and 4.27% in April, according to the calculations.
But compared with May, home-price appreciation appears to be easing a bit. Prices in the 70 cities increased an average 0.78% in June compared with May. They had risen 0.86% in May and 0.9% in April compared with the prior months, according to the calculations.
The data showed that prices of new homes in 63 of 70 large and medium-size cities rose in June from May. Prices fell in five cities and were unchanged in two cities. In May, prices rose in 65 cities.
"The moderation in growth momentum will likely continue, but home prices are not going to drop," said Lee Wee Liat, a property analyst at BNP Paribas . A decline is unlikely as many Chinese cities have issued guidance targeting home price growth at 10%, alongside expected gains in disposable income per capita, Mr. Lee added.
Average home prices in large cities such as Beijing, Shanghai and Guangzhou recorded mixed results in June compared with May. Those in Beijing rose 1.3%, unchanged from May; those in Shanghai rose 1.8% from 1.4%; and those in Guangzhou rose 1% from 1.5%. '
Rising home prices put pressure on the Chinese government to further tighten property-market restrictions put in place in recent years to contain the surging cost of housing. At the same time, the real-estate market is a key driver for the economy in a time of slowing growth.
"More important than introducing additional measures is the need for the central government to enforce its latest policies at the local level," said Mark Budden, who heads the Greater China office of property and construction consulting firm EC Harris.
The government still needs to closely manage the property market as most cities continue to show rising prices, statistics bureau spokesman Sheng Laiyun said at a news conference Monday.
Data in recent months show the government faces considerable pressure to keep prices in check, Mr. Sheng said. "In the future, we still need to step up control of the property market in accordance with the State Council's existing policies."
In March, the State Council, or cabinet, called on local governments to enforce a 20% tax on profit from sales of second homes, which so far has only been implemented in Beijing. It also warned of price curbs in cities where housing costs have risen too quickly.
Analysts say banks in major cities have started to remove discounts on mortgages to first-time home buyers and are taking longer to approval mortgages, which would also contribute slower price gains.
Apart from measures such as home-purchase restrictions to clamp down on demand, analysts said that the boost in land sales in major cities recently may help to prevent home prices from overheating. The government has increased land supply in major cities in recent months where there is huge demand for homes, and has been encouraging more developers to build more homes for the mass market.
"The government is addressing the structure of supply rather than its previous sole focus on pushing down demand, which is a good thing," Mr. Lee said.
Source: http://online.wsj.com/article/SB10001424127887323309404578612880231899740.html?mod=rss_world_markets
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