* May new home prices fall for 8 months in a row m/m
* Pace of deceleration slows, buyers worry about rebound
* Housing ministry reiterates price curbs to stay - Xinhua
* Property shares rise after data
By Langi Chiang and Kevin Yao
BEIJING, June 18 China's home prices dipped for
the eighth straight month in May but the pace of decline eased,
fanning talk that the market may be bottoming out and that
recent monetary stimulus could set the stage for a rebound.
Home prices in the world's second-largest economy have
fallen month-on-month since October, after China tightened
policy more than two years ago to take the steam out of sizzling
Still, Beijing reaffirmed hours after the data it would keep
property tightening measures in place, concerned that
inflationary pressures are still a problem even as the broader
Prices have declined but the cumulative drop is still mild,
analysts say, keeping home prices near record highs and out of
reach for the majority of China's burgeoning middle class. If
Beijing moves to loosen restrictions now, it may mean the
economy is slowing faster than expected.
"Housing prices are stabilising or approaching the bottom,"
He Yifeng, economist at Hongyuan Securities in Beijing. "But we
still cannot see any signs of rebounding."
Average new home prices fell 0.1 percent in May from a month
earlier, narrowing from April's fall of 0.3 percent, according
to Reuters calculations based on home price data in 70 cities
published by the National Bureau of Statistics on Monday.
Only 40 cities saw new home prices fall in May from April,
as compared with 43 in April, 46 in March and 52 - the most so
far - in December.
The set of year-on-year data told a different story, showing
the average new home prices dropped 1.5 percent in May. That
marked the third straight month of decline, and compared with
April's fall of 1.2 percent and March's dip of 0.7 percent.
A total of 54 cities suffered year-on-year home price
declines in May, by as deep as 14.2 percent in Wenzhou, an
eastern city seriously hit by private business failures in
recent months due to external headwinds.
After the housing data, Chinese property shares
reversed earlier losses, while Chinese developers listed in Hong
The People's Daily, the mouthpiece of China's ruling
Communist Party, said in an analytical report on Monday that
many home buyers worry about a rebound in property prices, as
China has relaxed monetary policies, which changed market
sentiment and boosted property sales since March.
"It seems home prices and tightening policies have reached
their bottom so quite a few home buyers are starting to panic
again," it said.
This is reminiscent of 2009 when prices doubled in several
months after Beijing rolled out a 4 trillion yuan ($628.43
billion) stimulus package, the newspaper said.
China has relaxed monetary and fiscal policies after a more
than two-year long property tightening campaign cooled the
country's red-hot property market, at the same time as the euro
zone debt crisis hit global financial markets and put a brake on
The central bank cut interest rates on June 7, the first
such move in more than three years, after it lowered banks'
reserve requirement ratio three times since November.
"Although these measures are not aimed at salvaging the
property market, they are a shot in the arm for the
cash-strapped real estate market," the People's Daily added.
Premier Wen Jiabao's government and its ministries have
reiterated no change in its tightening stance for the real
estate sector, which affects more than 40 other industries.
The latest confirmation of that policy came on Monday, in a
Xinhua report that cited the housing ministry.
An unnamed spokesman from the housing ministry was quoted as
saying that "all localities must firmly implement various
property tightening measures as required by the central
But the weakening economy, likely to grow at its slowest
pace in more than three years this quarter, is fuelling
expectations that Beijing will probably have to relax property
curbs if external headwinds worsen.
Reinforcing such expectations are local governments' steps
to make it easier for first-time home buyers, by relaxing
policies marginally so as not to irritate Beijing while
stimulating local housing transactions.
SALES PICK UP
The semi-official China Securities Journal reported on
Monday that transactions of new and existing homes combined rose
46.5 percent in Beijing in the first half of June as compared
with the same period last year, citing data from the local
housing bureau website.
The newspaper also cited local consultancy Home Link as
saying that 21 of the 76 new property projects that hit the
market so far this year recorded a rise in transaction prices.
However, high inventories will cap any quick rebound in home
prices in the near term, it cited Home Link analyst Chen Xue as
Vanke, China's largest developer by sales, said
earlier this month it would take about 11 months to sell down
unsold stocks in key cities such as Beijing, Shanghai and
"I'm not worried about a home price rebound as long as the
government keeps its tightening stance," Hui Jianqiang, head of
research at the China Real Estate Association, told Reuters
after the data.