China’s New Home Prices

The actions being taken by the Chinese government to strengthen the economy are now yielding the intended results. For the first time in 10 months the prices for new homes have increased in the country. This is according to data provided by SouFun Holdings, the biggest real estate website owner in the country. The easing on monetary policies by the Chinese government has been applauded as a step in the right direction. Home prices in the month of June increased by 0.1% from the previous month of May. This saw the pricing for houses increase to 8,688 yuan ($1,367) per square meter.

A survey conducted in 100 cities showed that Beijing had the biggest gains among the 10 biggest cities. According to the survey prices for homes went up by 2.3% from May. Shenzhen, China’s southern business hub was second with a rise of 0.8%.  China’s Vice Premier Li Keqiang, confirmed that controls by the government to prevent speculative home demand will continue. According to Xinhua News Agency the Vice Premier also called for the building of more affordable housing units in the country.

Although the government’s hand in the housing industry is still evident, it has also been instrumental in helping first time home buyers access funding. The government has helped to ease funding offered by lenders. The central bank’s cut on the benchmark one year lending rate in June was the first since the last cut done in 2008. The cut has influenced market sentiments. “Buyers are optimistic, they expect the government to be less stringent in smaller cities,” these were sentiments expressed by Jeffrey Gao, a property analyst based in Shanghai.

Mortgage providers in Beijing offered clients who were first time buyers mortgages at 15% discount. The discount was on the 6.8% benchmark rate. This discount was offered after the country’s central bank cut the borrowing costs. According to Wu Hao, a manager in Beijing’s second largest real estate broker, Bacic & 5i5j Group in the second half of 2011, buyers paid between 5% and 10% above the benchmark rate.

Some developers in the country have even called off discounts or raised prices after the increase in sales. Sales this year have increased, in the month of May the increase was by 19% to hitting the 375.7 billion yuan mark, based on information from the statistics bureau. The country’s largest developer, Evergrande Real Estate Group saw its sales volume hit a record 10.5 billion yuan in May.

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