China’s new home prices rose for a fourth month as a rebound in property sales eased developers’ funding woes, according to SouFun Holdings Ltd.
Prices in September climbed 0.17 percent from August to 8,753 yuan ($1,393) per square meter (10.76 square feet), the country’s biggest real estate website owner said in an e-mailed statement today, based on its survey of 100 cities. The city of Kunshan in the eastern Jiangsu province had the biggest gain, with prices rising 2 percent.
Home prices have reversed declines since June after the central bank cut interest rates to stem an economic slowdown and some local authorities eased restrictions as land-sale revenues fell. The central government has pledged it won’t waver from curbs, including home-purchase restrictions.
“Developers’ incentives to cut prices are gradually dissipating as sales recover this year,” said Zhao Zhenyi, a Shanghai-based analyst at Industrial Securities Co. “But there’s no strong momentum for price gains because inventories are growing with new projects coming in.”
Chinese developers’ credit outlook improved as the recovery in prices eased liquidity pressures and a slowing economy limited authorities’ incentive to further tighten policy, Standard & Poor’s said in a Sept. 18 report. The credit rating company may “see some positive rating actions” in the next six months as defaults by so-called distressed developers, such as Greentown China Holdings Ltd., are less likely after asset sales.
The measure tracking property stocks on the Shanghai Composite Index fell 1.7 percent by the noon break, paring this year’s rally to 6.7 percent.
The government has raised down-payment and mortgage requirements in its more than two-year effort to curb the property market. It also imposed a property tax for the first time in Shanghai and Chongqing, increased construction of low-cost social housing and enacted home-purchase restrictions in about 40 cities.
Land-sale revenue in the first eight months of this year slumped 26.1 percent from a year earlier after the cooling property market damped demand, the finance ministry said last month, putting pressure on local authorities to boost income. Guiyang, the capital of southwestern Guizhou province, will give residence permits to people after their first purchase of homes or commercial property in the city, Xinhua News Agency reported Oct. 5.
Guiyang’s policy adjustments, which in effect “challenge” the existing home-purchase restrictions, may be followed by other regions and may prompt interference from the central government, Shanghai-based CEBM Group Ltd. analyst Luo Yu wrote in a report today. Non-local home buyers are barred from borrowing mortgage loans, the government said in April, 2010.
Home prices fell 1.4 percent last month from a year earlier, according to today’s statement. The month-on-month gain was 7 basis points slower than in August.