Home prices continue to rise in major cities on buying demand

Home prices in China.s major cities continued to rise in July due to unabated demand from first-time buyers and increasing momentum in the land market across the country, the National Bureau of Statistics said yesterday.

Excluding government-subsidized affordable housing, new home prices rose in 62 of the 70 cities tracked by the bureau, compared with 63 in June and 65 in May. In the existing housing market, 57 cities saw monthly growth last month, compared with 55 in June and 64 in May.

New home prices in 12 cities registered monthly growth of above 1 percent in July, a drop of eight from June. The maximum monthly growth recorded last month was 2.2 percent, down from 2.4 percent in June.

The pre-owned housing market saw only one city with a monthly price gain of more than 1 percent, compared to three cities in June.

Xiamen, in Fujian Province, recorded the biggest increase in new home prices at 2.2 percent last month, closely followed by Shanghai and Guilin, which both climbed 1.9 percent. In Beijing, Guangzhou and Shenzhen, new home prices rose 1.6 percent, 1.1 percent and 0.9 percent, respectively.

.While the number of cities recording price gains remained insignificantly changed from that of June, increases of new home price continued to narrow in many cities last month covering both first and second-tier ones,. said Liu Jianwei, a senior statistician at the bureau. .In particular, second-tier cities such as Fuzhou, Yueyang and Nanchong saw their price growth decelerate more notably..

New home purchases in China rose 39.9 percent to 3.34 trillion yuan (US$545 billion) in the first seven months of this year, decelerating from its annual growth of 46 percent in the first half and the 56.8 percent rise in the first five months, the bureau said in a separate report earlier. By volume, they climbed 27.1 percent to 547.5 million square meters, compared to a year-on-year growth of 30.4 percent in the first six months and the rise of 37.6 percent between January and May.

The property market has been rising in the first seven months, following its rebound in the second half of 2012, said Zhu Zhongyi, vice president of the China Real Estate Industry Association.

Runaway prices led the government to issue guidelines in March to tighten control of the real estate sector, including higher transaction taxes, curbs on purchases of multiple homes and higher down payments.

But the guidelines did not halt the surge in property prices.

Shen Jianguang, chief economist with Mizuho Securities, told Xinhua news agency that only through measures like real estate registration and property taxes can the appreciation expectation on property be cut and local governments find more revenue sources with less reliance on selling land-use rights.