BEIJING (REUTERS) - Home prices in China rose for first time in over a year in October on an annual basis, signalling a housing market stabilisation that could help re-energise the listless economy.
Average new home prices rose 0.1 per cent in October from a year earlier, Reuters calculated from National Statistics Bureau (NBS) data out on Wednesday (Nov 18), reversing September's 0.9 per cent drop, marking the first year-on-year gains since August 2014.
Even a modest recovery in a sector that accounts for 15 per cent of gross domestic product is a welcome boost for an economy heading for its weakest growth in 25 years.
Still, a quick rebound is unlikely due to high inventories in all but biggest cities, forcing developers to slow the pace or even stop expansion to protect their cash flows.
"Home prices are unlikely to see big gains in second-and third-tier cities in future, as they are struggling with high inventories," said Guo Lei, an economist at Founder Securities in Shanghai.
In a sign of the weakness in the housing market, month-on-month price gains were recorded in only 27 of the 70 cities tracked by the NBS, down from 39 in September.
While noting the risks of high unsold inventories, China's President Xi Jinping said last week that China needed to reduce housing overhang to ensure sustainable development of its property market.
Data last week also showed that conditions remained weak in the housing market, as growth in property investment cooled to its slowest rate since the global financial crisis while new construction continued to see further year-on-year drops.
A breakdown of NBS data showed larger cities have led the price upturn, with Shenzhen being the top performer. Prices in Shenzhen rose 39.9 per cent in October from a year earlier, quickening from September's 37.6 per cent.
Following a year-long slump, home sales and prices have increased in bigger cities over recent months, helped by a barrage of government measures aimed at reviving the key sector and arresting an economic slowdown.
The China real estate index rose over 1 per cent after the data, outperforming the wider stock market.