Fewer cities see home prices rise in July

Fewer Chinese cities reported home price increases both in month-on-month and year-on-year terms in July, and residential property prices in major Chinese cities were either flat or down slightly from a month ago.

According to industry experts and officials, current market performance is stoking expectations of more supportive measures to be rolled out at an accelerated pace for stabilization in accordance with the central government's stance.

Of the 70 Chinese cities tracked by the National Bureau of Statistics, 20 reported month-on-month growth in new home prices in July, 11 fewer than a month ago. Measured in terms of year-on-year performance, the number of cities reporting year-on-year price rises was 26, versus 27 the month prior, said Sheng Guoqing, chief statistician with the National Bureau of Statistics' urban division, on Wednesday.

In July, new home prices in the 70 surveyed cities saw an average fall of 0.2 percent from the previous month, which is the second month in a row of declines, said Li Yujia, a researcher at the Guangdong Planning Institute's residential policy research center.

"The downward trend, however, appeared after numerous policies were announced at the tone-setting meeting of the Political Bureau of the Communist Party of China Central Committee held on July 24," said Li.

It was stated at the meeting that considering the fundamental changes in the supply-demand situation in the real estate sector, it is imperative to adjust and optimize property policies in a timely manner and make good use of the targeted policies in different cities.

"Various local governments — including hot spot first — and second-tier cities — are actively optimizing their respective measures, but there are also louder calls for policies to lower home mortgage costs and residential property prices," Li said.

Specifically, the four top-tier cities registered a 1 percent growth year-on-year in new home prices, while they remained unchanged from a month ago, said the NBS.

The 31 second-tier cities tracked by the NBS reported new home prices down 0.2 percent month-on-month on average in July, but a growth of 0.2 percent from a year earlier.

Among the 35 third-tier cities monitored, new home prices edged down 0.3 percent month-on-month, and fell 1.5 percent year-on-year.

"Some 450 property regulations were announced across the nation in the first seven months of this year. As lower-tier cities found it hard to come up with more supportive measures, additional effective fine-tunings are expected to be announced to restore market confidence, especially in benchmark first-tier cities," said Zhang Dawei, chief analyst at Centaline Property Agency.

The tepid market sentiment in July may have to do with the summer season, which is a traditional slow season for housing transactions, Zhang said.

The property market is also clouded by recent financial difficulties by Chinese property giants Country Garden and Sino-Ocean Group.

Country Garden last week anticipated a first-half loss of between 45 billion yuan ($6.17 billion) and 55 billion yuan.

As the overall property market undergoes adjustments, business problems facing individual property developers have truly impacted market expectations, said Fu Linghui, spokesperson of the National Bureau of Statistics and director-general of the Department of Comprehensive Statistics of the National Bureau of Statistics, during a State Council Information Office news conference on Tuesday.

"But we must realize that all these issues are temporary. The market will gradually perform its role as an adjustment mechanism, and along with the property market's consistent policy optimization, real estate developers' risks are expected to be resolved gradually," Fu said.

The secondary home market also saw fewer cities report price increases. Six cities witnessed existing home prices rise month-on-month in July, one less than the previous month. And five cities recorded a growth in prices year-on-year, versus six a month earlier.

"In late July, all of the four top-tier cities made respective responses and vowed to create policy optimizations in accordance with their conditions. Considering that both policy execution and market confidence recovery may take time, we expect a clear effect will be seen in the fourth quarter," said Chen Xiao, a senior analyst with Zhuge Real Estate Data Research Center.