BEIJING Home prices in China rose 0.05 percent in October from September, according to calculations based on official data announced on Sunday, adding to evidence of a recent, mild recovery in the country's property market and frustrating the government's efforts to temper prices.
It was the third month-on-month increase in five months following Beijing's decision to cut interest rates once each in June and July, which improved access to mortgage credit, and in the wake of policy tweaks by some cities to boost local property markets.
Average home prices in 70 major cities across China rose 0.05 percent in October from the previous month, after staying flat in September and June and increasing in August and July, according to Reuters' calculations from data released by the National Bureau of Statistics.
On a year-on-year basis, home prices across China still fell 1.1 percent in October for the eighth straight month of decline since March, thanks to the government's campaign for more than two years to cool an overheated property market. The pace of decline, however, eased last month from September's year-on-year drop of 1.3 percent.
A steady month-on-month increase in home prices will likely renew concerns about property inflation and could prompt Beijing to tighten property controls further, including moves such as expanding sales restrictions to more cities, experts say.
Luo Yu, a property analyst with CEBM in Shanghai, expects the upward home prices pressure to persist in coming months. "China is likely to tighten policy, probably expanding the home sales restrictions to more cities where home prices are rising fast," he said.
Housing Minister Jiang Weixin said on Monday China has no plans to relax its purchase restrictions in the real estate market. His comment dispelled views that the government would allow a rebound in the housing market.
The property price increase coincides with signs of a broadening economic recovery, as data last week showed.
MORE CITIES SAW PRICES RISE
Home prices rose month-on-month in 35 of 70 major cities monitored by the NBS in October, up from 31 in September. Prices fell in 12 of the 70 cities in October on a year-on-year basis.
The month-on-month data also showed new home prices in Beijing rose 0.2 percent, while those in Shanghai were flat last month. The two key cities saw year-on-year price falls of 0.2 percent and 1.3 percent respectively, the NBS data showed.
Property sales have shown signs of perking up in recent months as Beijing lowered interest rates twice this year to shore up economic growth. Some local Chinese governments have also relaxed property market restrictions to boost home sales.
More than 20 local governments have let buyers borrow more from the government's housing fund, which lends at lower rates than commercial banks.
Official figures on November 9 showed Chinese property sales revenues increased 31.7 percent from a year earlier, jumping from growth of 4.9 percent in September.
China Vanke Co Ltd 000002.SZ, the country's largest real estate developer by sales, said sales rose 33 percent in October from a year earlier to 13.7 billion yuan (1.3 billion pounds) after rolling out seven new projects.
Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, and only gave home price changes in each of the 70 major cities.
(Reporting By Xiaoyi Shao and Norihiko Shirouzu; Editing by Paul Tait)