News Analysis: China housing market regains momentum

BEIJING, Aug. 3 (Xinhua) - China's real estate market continued warming in July, with new home prices rising for the third consecutive month as government support policies take effect.

The average price per square meter in a sample of 100 cities rose 0.54 percent month on month to 10,685 yuan (1,747 U.S. dollars) in July, according to a survey by the China Index Academy, an independent research institute.

The gain slightly slowed from 0.56 percent in June but accelerated from 0.45 percent in May, which recorded the first rise after 16 months of declines.

The real estate market took a downturn in 2014 due to weak demand and a surplus of unsold homes. The cooling has continued into 2015, with both sales and prices falling and investment slowing.

"The real estate market is warming up largely because of official easing policies," said Zhang Shuyu, an analyst from the University of International Business and Economics.

"Market confidence has been restored as the central bank moves to combat the slowdown, cutting benchmark interest rates four times since November and lowering banks' reserve requirement ratio twice since February," said Zhang.

The country also eased down payment requirements for second-home purchases at the end of March, and some local governments have rolled back their restrictions on home purchases, he said.

Policy easing has helped the biggest cities and also done some good in second tier cities. Unfortunately, it has done little to revive third- and fourth-tier cities, experts said.

New home sales in China's 30 major cities - including Beijing, Shanghai, Guangzhou and Shenzhen - surged 44.2 percent year on year in July thanks to policy easing, according to a report released Saturday by E-house China R&D Institute, a leading property consultant firm.

Of the tier-one cities, Shenzhen witnessed the strongest growth of 186.4 percent last month compared with a year earlier, the report said.

However, on a monthly basis, new home sales in July dipped 5.5 percent from June, reversing the consecutive increases recorded across the previous four months.

"The month-on-month dip (in sales) has aroused unexpected panic among certain people who believe the home market is cooling off and prices are going to drop. For these people, I remind them not to lose sight of the more than 40-percent year-on-year sales increase in July," Yang Hongxu, deputy director of the Shanghai-based E-house China R&D Institute, said Monday on Weibo.

"The growth in July is also higher than the same period in 2012 and 2013. Not to mention the high temperature of up to 38 degrees Celsius in Shanghai and many other places have held potential buyers back from going out and visiting sales offices." Yang said.

Rating agency Fitch Ratings told Xinhua in an email on Thursday that China's housing market "further improves" as "sales pick up."

Fitch Ratings said in its latest China Property Watch that "the recovery in China's housing market continued in June 2015 as monthly contracted sales growth accelerated and new home prices rose further in first and second tier cities."

"Homebuilders have been conserving liquidity, though, and their land purchasing activities remained weak. They instead chose to replenish their land banks by acquiring controlling stakes in peers or existing projects. Most Fitch-rated homebuilders reported strong contracted sales growth in June," according to the Fitch Ratings.

Investment in China's property sector rose 4.6 percent year on year during January-June period this year, slower than the 5.1-percent increase seen in the first five months, earlier NBS data showed.

Li Chunyan, an analyst from CricChina.com, forecast that home prices will continue rising in the upcoming months, but at a slower pace due to oversupply. Endi