China property prices, investment perk up

Chinese property prices rose from year-earlier levels in June for the first time in seven months, providing further evidence of a sustained improvement in the real estate sector.

Prices in 70 cities rose 0.2 percent in the 12 months to June, compared with a fall of 0.6 percent in the 12 months to May, the National Development and Reform Commission, the country's economic planning agency, said on Friday.

On a monthly basis, prices were up 0.8 percent in June, compared with a rise of 0.6 percent in May, the commission said on its website, www.ndrc.gov.cn.

In another sign of growing confidence, year-on-year real estate investment growth quickened to 9.9 percent in the first half from 6.8 percent in January-May, the National Bureau of Statistics said in the China Information News, a newspaper it publishes.

That suggested a significant pick-up in capital spending in the real estate sector in June alone.

Property investment accounts for almost a quarter of China's fixed-asset spending, making it a key driver of industries such as steel, copper, cement, furniture and electrical appliances.

The statistics office also said property sales measured by volume increased 31.7 percent in the first half, up from a gain of 25.5 percent in the first five months, sustaining an upward trend that started at the beginning of the year.

As a result, China's property outlook index, which covers price and investment trends in the sector, rose to 96.55 points in June from 95.94 in May, the statistics office added.

The property market has revived in response to favourable government policies for home buyers, including cheaper mortgages and lower downpayments.

But some economists worry that the market is being artificially pumped up by plentiful cheap credit, which is attracting speculative investors from outside the sector: some recent land auctions have fetched record prices, paid by non-property companies.