China’s housing prices continued to rebound in July, rising by 0.54 percent compared to June, as the country’s real estate recovery refused to wilt in the summer heat.
The average home price nationwide now stands at RMB 10,685 ($1,721) per square metre, according to a survey of 100 cities by the China Index Academy, a unit of online real estate platform Soufun.
In addition to beating July’s hot weather, the continued recovery in the housing market also came despite the recent stock market crash, which saw equity prices drop sharply during July.
Housing Prices Recovering After One-Year Slide
July’s housing prices indicate that the market is sustaining momentum during the summer months, and that the recovery in home demand could well continue to grow in the second half of 2015.
Last month’s 0.54 percent climb in prices showed only a slight slackening from June’s 0.56 percent rate of increase. The Academy found that housing prices rose by 0.50 percent in May after nearly a solid year of sliding prices.
The turnaround in China’s housing demand comes after government rule changes at the end of March helped to bring more buyers back into the market. The central bank has also made several rounds of interest rate cuts since late last year.
Rebound Surviving the Summer
For the second straight month, Shenzhen led all cities nationwide with a 9.73 percent increase in prices last month, as the Guangdong border town continues to benefit from its proximity to Hong Kong.
Among China’s three other first-tier cities, Beijing ranked fifth last month in terms of price increases, with a 1.49 percent jump compared to June, and Shanghai placed tenth with a 1.16 percent rise. Guangzhou saw prices fall by 0.23 percent.
Overall, 53 cities reported falling prices, up from just 46 in June. Prices rose in 46 cities last month, the survey found, compared to 53 in June.
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Among the ten cities with the biggest gains in home prices, three were first-tier cities, another three were third-tier cities, and four were second-tier cities.
In China’s ten biggest communities, in addition to Guangzhou, both Chengdu and Chongqing in western China saw prices fall, at 0.42 percent and 1.05 percent respectively. The other top ten cities all reported rising prices.
On a year-on-year basis new home prices fell 1.38 percent in July, improving from a decline of 2.70 percent in June, according to the Academy’s report.
Stock Market Crisis Fails to Deter Housing Recovery
Although the gyrations in China’s stock market have seized public attention during late June and into July, there doesn’t seem to be clear evidence of the turbulence having an impact on the housing sector.
According to some analysts, last month was the worst on record for China’s stock markets with the Shanghai Composite Index falling a total of 15 percent despite large levels of state intervention to avert a freefall in share prices.
By contrast, the housing market stayed relatively stable. “Confidence in the property market is improving steadily and we expect continuous growth in sales and prices,” Soufun analysts noted in the report.
The stock market crisis also has not yet driven large numbers of investors into housing as a safe haven. The total sales of new homes declined 5.5 percent in July compared to June, according to another study released by a unit of E-House China. However, the figure for sales volume was still 44.2 percent higher than the same period in 2014, when the country’s was in the depths of its housing doldrums.