Trend in home prices promises stability

Home prices in China's 70 large and medium-sized cities remained largely flat month-on-month in June, with more cities reporting growth than declines, indicating the sector is well on track to stability as supportive measures introduced earlier to encourage rational demand are taking effect, industrial experts said.

In June, there were 31 out of the 70 cities that saw month-on-month growth in new home prices, compared with 25 in May, data from the National Bureau of Statistics showed on Friday.

Compared with June of last year, home prices in 70 Chinese cities tracked by NBS either grew at a slower pace or declined in June this year. The number of cities reporting year-on-year growth in new home prices shrank from 23 to 21, said Sheng Guoqing, chief statistician with the NBS urban division.

"The supportive measures introduced by local governments, along with better COVID-19 control, helped China's home market stage a decent performance in June," said Chen Xiao, senior analyst with the Zhuge Real Estate Data Research Center.

Chen further said first-tier cities have taken the lead in the recovery, followed by major second-tier cities.

The NBS also published property development investment data on Friday.

China's investment in property development fell 5.4 percent year-on-year to 6.83 trillion yuan ($1.01 trillion) in the first half of this year, with 5.18 trillion yuan invested in developing residential buildings, down 4.5 percent year-on-year, NBS data showed.

The Zhuge research center said more than 160 Chinese cities eased local property market rules as of the end of June, which effectively boosted market confidence and stabilized home prices. The market correction will take place in the fourth quarter, Chen said.

The pre-owned home market was on a similar curve of recovery, NBS data indicated.

In 21 cities, existing home prices increased month-on-month in June, compared with 15 in May. And 12 cities recorded growth in year-on-year prices, one less than that in May.

Despite the encouraging market recovery, some homebuyers' suspension of mortgage payments (due to delayed deliveries or suspended construction of their presold homes) should be cautiously handled, because if the issue is not resolved effectively, property sales this month may be affected, said Wang Xiaoqiang, chief analyst with the Zhuge Real Estate Data Research Center.

According to a report in the 21st Century Business Herald, as of Thursday, more than 180 property projects in a dozen provinces and autonomous regions across China were involved in the issue.

An unidentified official from China's top banking and insurance regulator said on Thursday the key is to ensure timely deliveries of presold homes.

The regulator, the official said, will continue to implement the decisions taken by the central authorities, and stick to the position that "housing is for living in, not speculation". The regulator will also focus on stabilizing land prices, housing prices and market expectations.

It will maintain the continuity of financial policies related to real estate, maintain realty financing in a stable and orderly manner, and support China's residential market to better meet reasonable housing needs of homebuyers, the official said.