China home prices rise for second month in June

Here's where sovereign wealth funds are moving their money to
Getty Images

Chinese home prices rose for a second month in a row in June, on a monthly basis, indicating that government efforts to boost the struggling property sector have started to gain traction.

Average new home prices across China rose 0.4 percent in June versus May, according to Reuters calculations from official data published on Saturday. That was a faster gain than the 0.2 percent rise in May, the first monthly increase since April 2014.

The second month of rising prices is a sign of bottoming out for one of the country's key sectors and should ease fears of a sharp slowdown in China's economy.

On Wednesday, China reported annual growth of 7 percent in the second quarter of this year.

A mild recovery in the market could be welcomed by the government as long as it does not turn into a swift rebound, which would pose the risk of rekindling property bubbles.

On an annual basis, home prices fell 4.9 percent in June, the 10th consecutive annual fall, but at a slower pace than the 5.7 percent dip in May.

Sheng Laiyun, spokesman of the National Bureau of Statistics (NBS), said on Wednesday the property sector had shown marked improvement in the second quarter, boding well for the broad economy.

The government in the past few months has relaxed tax rules and cut downpayments for second-home buyers.

Read More

The government's pro-growth policy, which included four cuts to benchmark interest rates since November, also helped boost property sales and change market sentiment.

Across China, home prices rose month-on-month in 27 of the 70 major cities monitored up from 20 in May, NBS data showed.

Prices in the wealthiest cities lead the gains with most third-tier cities still seeing prices falling, highlighting a growing divide in the market.

"There are relatively strong housing demand and transactions in the first-tier cities, where home price gains are much higher than that in second- and third-tier cities," Liu Jianwei, a senior statistician at the NBS, said in a statement accompanying the data.

The southern city of Shenzhen was the top performer, recording the third consecutive month of rebound, up 15.7 percent in June from a year ago, following a 7.5 percent rise in May.

Shanghai's prices also swung into positive year-on-year growth, rising 0.3 percent in June and reversing a drop of 2.3 percent in May.