More cities nationwide witness increase compared to April
The average new home price in China's 100 major cities increased by 0.45 percent month-on-month in May mainly due to the central government's policy support, data from a property research firm showed Monday.
Analysts expected the recovery to continue in the second half of 2015.
The average new home price in the 100 cities rose to 10,569 yuan ($1,705) per square meter in May from 10,522 yuan per square meter in April, which was a 0.01 percent month-on-month drop, according to a report released by property research firm China Index Academy (CIA) on Monday.
Moreover, 48 cities out of the 100 saw monthly price growth in May compared to 39 in April. The other 52 cities had monthly home price drops in May, while 60 cities had month-on-month price falls in April, the CIA report said.
"The real estate sector recovered in April and this development continued in May, thanks to the authorities' supportive policies, especially the new mortgage policy issued at the end of March," Gu Yunchang, deputy head of the China Real Estate and Housing Research Association, told the Global Times on Monday.
A joint notice on March 30 from the People's Bank of China (PBC), or the central bank, the Ministry of Housing and Urban-Rural Development and the China Banking Regulatory Commission eased mortgage conditions for second-home buyers and waived transactions taxes on apartment sales.
Afterward, Beijing announced lower down payment requirements for first-time buyers and easier conditions for second-home purchases, which took effect on Monday.
The PBC has also cut interest rates three times since November 2014, lowering homebuyers' financing costs.
Gu said these policies not only lowered the threshold for homebuyers but also gave them confidence in property transactions.
However, the recovery is more obvious in the first- and second-tier cities while third- and fourth-tier cities are still in the process of selling their large home inventories, Zhang Hongwei, research director at Shanghai-based property consultancy ToSpur, wrote in a research note sent to the Global Times on Monday.
"For the whole market, especially in small and medium-sized cities, there will not be a home price surge like what we saw in 2009 due to the remaining inventory of homes as well as the current supply and demand situation," Gu said, noting destocking should be property developers' top task instead of charging high prices blindly.
He also predicted that the property market may perform better in the third quarter of this year.
Zhang said transactions will increase in June because besides supportive policies, property developers, especially the listed ones, will try harder to promote sales in June to meet mid-year sales goals.