China’s new home prices increased in May for the first time in four months as the effects of Beijing’s loosening policies to boost the market kick in.
The average price of a new home in China’s 100 major cities rose 0.5 per cent month on month to 10,569 yuan ($1,696) per square metre, the China Index Academy said in a report on Monday.
Prices had been falling since February and the increase was stronger than a 0.21-per cent gain in January, which came after eight straight months of declines.
“Looking ahead the property market overall shows a warming trend. But some cities still see inventory pressures and the supply and demand is still tense,” the CIA said in the statement.
China’s property market has been in the doldrums for more than a year as expansion in the world’s second-largest economy slows.
Authorities have taken steps to support the industry as real estate investment remains a key driver for the economy, while land sales are a major source of revenue for cash-strapped local governments.
The central People’s Bank of China (PBoC) has cut benchmark interest rates three times since November, and eased mortgage policies in September.
In late March it lowered minimum downpayment levels on second homes nationwide, rolling back a four-year-old policy first introduced to rein in soaring prices that were making home ownership unaffordable for many and raising worries about potential social unrest.
It also shortened the ownership period during which sellers are liable to a 20-per cent capital gains tax on properties other than their main home.
China’s economy grew 7.4 per cent last year, the weakest rate in nearly a quarter of a century. More recent indicators have pointed to the frailty extending into the current quarter.
The PBoC has reduced the percentage of funds banks must hold in reserve twice this year, in a bid to boost lending, and analysts broadly expect policymakers to announce further easing in the coming months.
On a year-on-year basis house prices fell 3.73 per cent in May, compared with a decline of 4.46 per cent in April, according to the CIA.
The average price in China’s top 10 cities was 19,148 yuan per square metre, down 2.33 per cent from a year ago, it said.