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China July Home Sales Decline as Wen Vows Curbs to Stay

China’s home sales transaction value dropped 14.5 percent in July from the previous month as the government vowed to maintain curbs on the property market.

The value of homes sold fell to 454.4 billion yuan ($71.5 billion) from 531.3 billion yuan in June, based on the difference between the National Bureau of Statistics’ data for the first seven months and first half of the year. Housing sales from January to July declined 1.1 percent to 2.4 trillion yuan from a year earlier, according to the data.

China sent eight teams to 16 provinces last month to check on the implementation of its property curbs, and the nationwide check is aimed at “firmly” restraining property speculation and consolidating results of the curbs, the central government said on its website on July 25. Premier Wen Jiabao has said the government will maintain the curbs it began introducing in April 2010 to ensure housing remains affordable.

“There’s still a lot of uncertainty at the government’s policy level, but today’s data is not strong enough to trigger new tightening measures,” said Zhao Zhenyi, a Shanghai-based property analyst at Industrial Securities Co., in a phone interview. “Developers still need to de-stock many completed homes, so it’s difficult for new housing starts to improve soon.”

Investment in homes, office buildings, malls and other real estate gained 15.4 percent to 3.7 trillion yuan in the first seven months, slower than the 33.6 percent gain a year earlier, according to the statistics bureau statement on its website today. New property construction declined 9.8 percent to 1.04 billion square meters (11.2 billion square feet).

Slowing Inflation

Seasonally adjusted factors accounted for the slowdown in sales in July, usually a low season for property sales, said Nicole Wong, a Hong Kong-based property analyst at CLSA Asia-Pacific Markets. The value of home sales rose 41 percent in June, the most in a year, as the government eased monetary policies.

China’s inflation cooled for a fourth month in July, up 1.8 percent from a year earlier, providing more room for Wen to loosen policies to stem a growth slowdown in the world’s second-biggest economy.

A gauge tracking property shares on the Shanghai Composite Index rose to the highest in a week by 1.3 percent at local closing, also the biggest advance among five industry groups on the benchmark, which added 0.6 percent.

Home sales volume dropped 7.5 percent in the first seven months from last year to 430.8 million square meters, the government data showed today. Property sales value, including office buildings and retail space, fell 0.5 percent to 2.9 trillion yuan from a year ago.

Declining Sales

China Vanke Co., the country’s biggest developer, said July sales fell 22 percent from a month earlier. Glorious Property Holdings Ltd., a developer controlled by Chinese billionaire Zhang Zhirong, said sales dropped 20 percent last month from June.

China may set new property controls as early as this month after the central government’s inspection team returns to Beijing, the official China Securities Journal reported today. The government has some room to issue more policies, including raising the transaction tax on existing homes and expanding a property tax trial, the newspaper reported, without saying where it got the information.

“In general the housing market is improving, but it won’t improve very fast,” said CLSA’s Wong. “The property policies are unlikely to ease any time soon. Neither will further tightenings.”

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