Slower rise in home prices may lead to property curbs easing

Growth in new home prices in China slowed last month, giving authorities more latitude in easing controls over the property market.

At least six cities in China have loosened restrictions on buying property, and more are expected to follow, said Zhang Dawei, chief analyst with property company Centaline. The controls were imposed to rein in runaway prices that prevented middle- and lower-income people from buying homes.

With price rises easing amid sluggish sales, local governments now worry about adverse effects on their economies.

"More than 30 cities nationwide are expected to loosen controls on the property market as the market continues cooling," said Zhang.

In its monthly survey of home prices in 70 major Chinese cities, the National Bureau of Statistics reported yesterday that prices rose in 44 cities in April. That compared with increases in 56 cities in March and 57 cities in February.

The figures exclude government-subsidized homes.

On an annual basis, Shanghai's home prices were the biggest gainers in China in April, with 13.6 percent from a year earlier. It was the sixth straight month that the city led the nation.

According to the latest nationwide survey, prices in 18 cities were flat, while prices in Hangzhou, Ningbo, Wuxi, Wenzhou, Jinhua, Anqing, Ganzhou and Huizhou declined.

The average increase for housing prices in the 70 cities was 0.1 percent in April, down 0.2 percentage point from a month earlier.

AXA Investment Research said in a research report last week that an ample supply of housing in lower-tier cities, tight monetary conditions and the government's anti-corruption policy have all adversely affected housing demand.

Last week, China's central bank urged commercial lenders to give priority to first-time homebuyers, who often have trouble getting a mortgage.

"The PBOC's measures to mitigate the decline in property sales are not significant enough to turn around the downward momentum in the property sector," Nomura Securities said in a note last week.

Housing prices have seen a boom since 2003, putting a home out of the reach of many ordinary people. The central government has been imposing curbs to try to quell the price spiral, Xinhua said.

The statistics bureau said new housing starts, a leading sign of property investment, fell 27.2 percent in the first quarter, while home sales fell 5.7 percent.

"In one to two years, this will have a tremendous negative effect on real estate investment and local governments' infrastructure investment," said Chen Wenzhao, an analyst with China Merchants Securities.