China Home Prices Post First Gain in 10 Months, SouFun Says

China’s new home prices rose for the first time in 10 months as the government eased its monetary policies to bolster the economy, according to SouFun Holdings Ltd. (SFUN), the nation’s biggest real estate website owner.

Home prices increased 0.1 percent from May to 8,688 yuan ($1,367) per square meter (10.76 square feet), SouFun said in an e-mailed statement today, based on its survey of 100 cities. Beijing led gains among the nation’s 10 biggest cities, climbing 2.3 percent from May, followed by the southern business hub of Shenzhen, which added 0.8 percent.

China’s Vice Premier Li Keqiang asked for curbs on speculative home demand to be continued and called for more efforts to build affordable housing units, Xinhua News Agency reported yesterday. While the government maintained its housing curbs, it 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.

“The rate cut played a big role changing the sentiment on the market,” said Jeffrey Gao, a Shanghai-based property analyst for Macquarie Capital Securities. “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.”

A gauge tracking property shares on the Shanghai Composite Index (SHCOMP) climbed 0.5 percent at the close, the highest in more than a week. The benchmark measure gained less than 0.1 percent.

First-Time Buyers

Lenders in Beijing gave first-home buyers mortgages at a 15 percent discount to the 6.8 percent 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 percent to 10 percent more than the benchmark, she said.

Buying sentiment has gradually increased after the monetary policy easing this year, SouFun said in today’s statement. Some developers have called off discounts or even raised prices after sales picked up, it said.

China’s home sales rebounded for the first time this year in May, rising 19 percent to 375.7 billion yuan from the previous month, according to the statistics bureau. Evergrande Real Estate Group Ltd. (3333), the country’s biggest developer by sales volume, posted a 33 percent 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.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

5:39

June 18 (Bloomberg) -- Peter Churchouse, chairman of Hong Kong-based property investment firm Portwood Capital, talks about real estate markets in China, Thailand, Singapore and Hong Kong. China’s home prices fell in a record 54 of 70 cities tracked by the government in May as developers cut prices to boost sales amid housing curbs. Churchouse speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

5:35

May 22 (Bloomberg) -- Jiong Shao, head of China strategy at Macquarie Securities in Hong Kong, talks about the outlook for China's economy and his investment strategy for Chinese stocks. Shao speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

4:36

May 2 (Bloomberg) -- Alistair Thornton, a Beijing-based economist with IHS Global Insight, talks about China's real estate market. China’s April home prices fell to a 14-month low as the government pledged to maintain property curbs, according to SouFun Holdings Ltd., the nation’s biggest real-estate website owner. Thornton speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)