China June home prices rise 7.3% on year but monthly gains slow further

A taxi passes by a housing construction site in Shanghai on July 1.
A taxi passes by a housing construction site in Shanghai on July 1.PHOTO: AFP

BEIJING (REUTERS) - Home prices in China's 70 major cities rose 7.3 per cent in June from a year earlier, an official survey showed on Monday(July 18), accelerating from a 6.9 per cent rise in May.

Gains on a monthly basis continued to slow, however, as some cities tightened policies amid fears of a housing price bubble.

The monthly rise slowed slightly to 0.8 per cent in June, compared with 0.9 per cent in May, according to a Reuters calculation based on data issued by the National Bureau of Statistics (NBS).

On a year-on-year basis, Shenzhen and Xiamen were the two top performers, with home prices rising 46.7 per cent and 33.6 per cent, respectively.

Beijing prices rose 20.3 per cent, slightly faster than in May, while Shanghai prices rose 27.7 per cent, the same as in May.

A recovery in China's property market since late last year and a government infrastructure building spree in recent months have helped shore up growth in the world's second-largest economy, which has been weighed down by weak demand at home and abroad, cooling investment and excess industrial capacity.

But sharp gains in housing prices especially in the biggest cities have triggered fears those markets are becoming overheated, even as smaller cities still face high housing inventories.

Chinese cities at the forefront of the latest surge in housing prices are expected to tighten policies to make it tougher to buy property and head off speculators who are partly behind the rally.

Data on Friday showed that property investment in the first half of this year rose 6.1 per cent from a year earlier, slowing from an increase of 7 per cent in January-May, while property sales by floor area grew 27.9 per cent, down from 33.2 per cent.

For June alone, property investment was up only 3.5 per cent from a year ago, according to Reuters calculations, compared with 6.6 per cent in May.

That slowdown prompted economists at ANZ to declare that China's property-led recovery was over, which could pose further risks to the economy in the second half of the year.

China's residential land prices rose faster in the second quarter than in the previous three months, while those for industrial land posted slower growth, a report from the Ministry of Land & Resources said.

Residential land prices in 105 cities surveyed gained 1.95 per cent in April-June from the previous quarter, which saw a 1.27 per cent increase from October-December, according to the ministry's China Urban Land Price Dynamic Monitor.