The Chinese government has kept measures in place that have acted to keep residential real estate prices from spiraling up and out of control, but have recently eased these monetary policies, particularly with respect to interest rates. The reaction in the property market was very quick as prices inched up for the first time in 10 months. The 0.1% increase is not impressive given that most of the government’s restrictions are still in place, but it is not insignificant either and experts say the impact on buyer sentiment was very positive. Developers have responded by rescinding discounts and raising prices, helping push prices up. For more on this continue reading the following article from Property Wire.
Prices of new homes in China increased for the first time in 10 months as the government eased its monetary policies to bolster the economy, according to the latest data from SouFun Holdings, the country’s biggest real estate website owner.
Home prices increased 0.1% from May to 8,688 yuan ($1,367) per square meter, SouFun said in a statement today. The survey, based on prices in 100 cities, also shows that Beijing led gains among the 10 biggest cities, climbing 2.3% from May, followed by the southern business hub of Shenzhen, which saw prices rise 0.8%.
Curbs on speculative home demand are to be continued, China’s Vice Premier Li Keqiang confirmed. He also called for more efforts to build affordable housing units, according to the Xinhua News Agency.
While the government has maintained its housing curbs, it has also helped ease funding by lenders and vowed to support first home buyers. The central bank cut the benchmark one year lending rate last month for the first time since 2008.
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‘The rate cut played a big role changing the sentiment on the market. The government hasn’t changed the overall direction of the property policy, but it probably will be less stringent on the easing in smaller cities,’ said Jeffrey Gao, a Shanghai based property analyst for Macquarie Capital Securities.
Lenders in Beijing gave first time buyers mortgages at a 15% discount on the 6.8% benchmark rate after the central bank reduced borrowing costs, said Wu Hao, a manager at the loan brokerage of Bacic & 5i5j Group, the capital’s second biggest real estate broker. In the second half of 2011, they paid 5% to 10% more than the benchmark, she said.
Buying sentiment has gradually increased after the monetary policy easing this year, SouFun said. Some developers have called off discounts or even raised prices after sales picked up, its statement added.
Sales have rebounded for the first time this year, increasing 19% in May to 375.7 billion yuan from the previous month, according to the statistics bureau.
Evergrande Real Estate Group, the country’s biggest developer by sales volume, posted a 33% rise in sales to a record 10.4 billion yuan in May from a year earlier.
China’s home prices will remain unchanged from 2011 by the end of the year, and rebound by the second quarter of next year, according to Gao.
This article was republished with permission from Property Wire.