China's real estate market is on the mend: Time Weekly

A building under construction in Changsha, capital of Hunan province.

Some signs point to a revival in China's struggling real estate market, with the latest data from the China Real Estate index system showing that the average price of houses in 100 leading cities rose 0.05% to 8,688 yuan (US$1,375) per square meter in June, ending a nine-month fall, reports the Chinese-language magazine Time Weekly.

Signs of a recovery were also evident in statistics compiled by a private realty monitor, which showed that sales of homes in Shanghai increased 30.7% in terms of their combined area, and 11% in terms of value. The number of apartments sold in Beijing increased by 10.5% in June, representing an increase of 50.6% from the same month in 2011.

Chinese premier Wen Jiabao nevertheless said on July 7 in Jiangsu province that the government would not back down on its policy of containing housing prices. Before the premier made the statement, four major bodies — the Banking Regulatory Commission, the central bank, the Ministry of Housing and Urban-Rural Development, and the National Development and Reform Commission — had issued statements to the same effect.

The Communist Party-run People's Daily said in an editorial published July 4 that the containment of housing prices had not yet concluded and that the policy should not be relaxed.
Some analysts are no doubt reserved about whether the market — a major driver of growth in recent decades — is in fact recovering. The market is steadying, said Huang Tao, a manager with major real estate firm Centaline Property who spoke to Time Weekly. It remains to be seen whether this is a recovery, he added.

Huang said that house prices are more likely to decline than to recover, noting that there are 780,000 houses in inventory in 13 leading Chinese cities by the end of May, representing a 29.6% rise over the same period last year. He rebutted some analysts' views that the recent lowering of interest rates would boost the property market, saying the policy was aimed at boosting the flagging overall economy and that real estate couldn't thrive in such a situation.

Zhang Hongwei, the head of realty consultancy Tospur, echoed Huang's views, saying that in the first five months of this year, the buying of new land by real estate developers declined 18.7% from the same period last year, adding that the total size of houses under construction decreased 4.3%.
"All these indicate a weak market," said Zhang.