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Property Investment Accelerates And Home Prices Pick Up In June: China

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The property market has gained momentum in recent months supported by policy stimulus and as travel curbs to halt the spread of the coronavirus were lifted in most regions.

China’s real estate investment grew faster in June than May helped by more robust construction activity and easier credit, as policymakers focused on getting the economy back on its feet after the coronavirus outbreak.

The property market has gained momentum in recent months supported by policy stimulus and as travel curbs to halt the spread of the coronavirus were lifted in most regions.

Some analysts expect the market to keep improving in the second half as infections fall, while others say a sustainable rebound may still be sometime away as consumer confidence remains soft and Beijing continues to crack down on speculation.

Real estate investment in June rose 8.5% on year, compared with 8.1% growth in May, calculations based on National Bureau of Statistics (NBS) data on Thursday.

For January-to-June, property investment returned to growth for the first time this year, rising 1.9%, better than a 0.3% fall in the first five months.

That comes as new construction starts measured by floor area increased 8.9% last month, compared with May’s 2.5% uptick.

“May and June’s data have shown the impact of the epidemic on real estate has passed, and the market will continue to heat up,” said Zhang Dawei, a Beijing-based analyst with property agency Centaline.

Funds raised by China’s property developers still fell 1.9% in January-June, but narrowed from a 6.1% drop for the first five months.

However, property sales by floor area rose less in June with an increase of 2.1%, down from 9.7% growth in May.

Property prices also showed signs of recovery.

Average new home prices in 70 major cities rose 0.6% in June from the prior month, quickening from 0.5% growth in May based on NBS data showed.

It was the fastest pace since July 2019, with more cities registering higher prices from the previous month. On an annual basis, home prices expanded 4.9% in June, matching that in May.

While the government has refrained from strong easing in the property market, measures to boost credit and cut interest rates have seen a rebound in mortgages and consumer loans.

Centaline’s Zhang said looser credit and easier access to obtaining residency – which helps out-of-towners get around purchase curbs – were largely behind the recovery.

Major cities including Hangzhou, Ningbo and Shenzhen imposed new restrictions on property transactions this month to arrest sharp price rises and curb speculation.

Source: Reuters

(Note: The story has been published without modifications to the text. Only the headline has been changed.)

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