New home prices surge in most cities

Chinese cities where home prices rose exceeded those where they declined for the first time in 16 months in July, as authorities removed some property curbs and interest rates fell.

New-home prices rose in 31 cities of the 70 the government monitors, from 27 in the previous month, according to data released by the National Bureau of Statistics on Tuesday. The prices dropped in 29 cities and were unchanged in 10.

Led by some of the biggest Chinese cities, prices extended gains from the second quarter, spurred by the easing of mortgage policies at the end of March and four reductions in borrowing costs since November. The trend will continue this year as liquidity remains ample and expectations of rising prices further prompt more people to buy, overriding any potential impact from a devalued yuan and a stock-market selloff, according to Mizuho Securities Asia Ltd.

"The average price gains may accelerate in the second half as prices in the second-and third-tier cities are just starting to rise," Alan Jin, a Hong Kong-based real estate analyst at Mizuho, said by phone. "The demand is still there."

The average price of the 70 cities rose 0.17 percent from June, gaining for a third consecutive month, according to Bloomberg calculations of official data.

Loosened policy restrictions will have an "increasingly positive impact" on property sales in the second half of the year, Standard & Poor's said in an Aug 14 report, raising its forecast for full-year sales to a gain of as much as 10 percent from a decline. The average selling price may rise 5 percent, the ratings agency said, compared with its previous projection of declines of as much as 5 percent.

A stocks selloff in June and early July that wiped more than $3 trillion of market value has not disrupted the property recovery, and China's first major currency devaluation since 1994 this month will hardly do so either as most homebuyers are domestic owner-occupiers, according to Mizuho.

Property sales in 35 cities tracked by SouFun Holdings Ltd jumped 37 percent last week from a year earlier. "Summer sales this year look great" for a traditionally slow season, Jin said.