SHANGHAI (REUTERS) - Chinese home prices rose in July for a third consecutive month, fuelled by improved sales and market sentiment, suggesting the property market is slowly recovering in a rare counterpoint to a growing list of grim economic indicators.
Average new home prices rose 0.3 per cent in July versus June, according to Reuters calculations based on data released by the National Bureau of Statistics(NBS)on Tuesday (Aug 18), slightly slower than June's 0.4 per cent rise.
Even a mild recovery in one of the country's key sectors would provide a valuable boost for an economy heading towards its weakest growth in 25 years.
While policy tweaks and increasing lending helped fuel a wave of pent-up home buying in recent months, a huge overhang of unsold houses in smaller cities keeps the sector under pressure.
China Vanke, the country's largest property developer, said on Monday that the housing market is slowly emerging from a year-long slump, but it will take time to see a full recovery.
"The number of land acquisitions has decreased, and inventory is slowly being digested. It'll take time, but it's confirmed that a recovery is ongoing," said Vanke President Yu Liang.
The NBS data showed home prices across China rose month-on-month in 31 of the 70 major cities monitored, up from 27 in June.
Prices in first-tier cities such as Beijing, Shanghai and Shenzhen have been leading the recovery.
The southern city of Shenzhen was the top performer, recording the fourth consecutive month of rebound, up 23.6 per cent in July from a year ago, following a 15.7 per cent rise in June.
The capital city Beijing rose 1.0 per cent last month from a year earlier, reversing June's drop of 1.1 per cent.
Shanghai's home prices were up 3.1 per cent in July from a year ago, compared with a year-on-year rise of 0.3 per cent in June.
"We should pay high attention to overheating risks in some bigger cities," said Yan Yuejin, a property analyst at real estate services firm E-House China EJ.N in Shanghai.
Beijing has stepped up curbs on property market speculation after prices surged in one area of the capital, raising concerns some bigger cities may also tighten home purchase rules.
China's real estate investment growth continued to slow in the first seven months of 2015, but property sales and housing investment improved, indicating a mixed recovery in the struggling house market.
Compared with a year ago, home prices still fell 3.7 per cent in July, easing from the previous month's 4.9 per cent drop, Reuters calculated from NBS data showed.