China new home prices unchanged in June, after dropping for two months

Buildings of residential compounds are seen in Shanghai, China October 9, 2020. REUTERS/Aly Song

BEIJING, July 15 (Reuters) – China’s new home prices were unchanged in June after falling in the past two months, as strict COVID-19 curbs were eased and consumers took advantage of a slew of stimulus measures such as cuts in mortgage rates and smaller down payments.

Average new home prices in 70 major cities were steady month-on-month, after a 0.1% drop in May and a 0.2% decline in April, according to Reuters calculations based on National Bureau of Statistics (NBS) data released on Friday.

From a year earlier, new home prices in June fell 0.5%, the sharpest pace since September 2015, versus a 0.1% drop in May and a 0.7% rise in April.

China’s property sector, which accounts for about a quarter of the economy, is mired in a deep slump amid a string of debt defaults by developers, including China Evergrande Group (3333.HK), and protests from homebuyers over stalled projects. read more

But it has recently shown signs of improvement after lockdowns were eased and on measures aimed at ending the market chaos. On Thursday, regulators vowed to help local governments deliver projects on time after homebuyers threatened to stop mortgage payments on unfinished apartments. read more

Major homebuilder China Vanke Co (000002.SZ) said in June that the property market had bottomed in the short term, with a clear month-on-month rise in sales for the month.

Household loans, including mortgages, rose to 848.2 billion yuan ($125.77 billion) in June from 288.8 billion yuan in May, central bank data showed.

Among 70 cities surveyed by the NBS, 31 reported a gain in monthly price in June, more than 25 cities in May.

But analysts say confidence in China’s property market remains fragile, with consumers spooked by continued COVID flare-ups and worried about jobs.

Financial services firm Gavekal warned in a recent note that the strength and sustainability of the recent pick-up in property sales therefore remains an open question.

($1 = 6.7432 Chinese yuan)

(Corrects April y/y move to 0.7% rise, not 0.2% drop, in third paragraph)

Reporting by Liangping Gao and Ryan Woo; Editing by Kim Coghill and Himani Sarkar

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