China May home price rise highlights policy dilemma
By Xiaoyi Shao and Jonathan Standing
BEIJING (Reuters) - China's home price rises slowed for a second straight month in May from the previous month, in a sign that Beijing's attempts to bring stability to a frothy property market are having some effect.
However in year-on-year terms, prices rose at their fastest pace this year, highlighting the dilemma facing authorities looking to support an economy struggling with weak export demand and sluggish activity without resorting to tough measures that could risk a sharp slowdown in property, one of the few growth areas.
The government unveiled a fresh round of measures in March to try to cool the sector, but they were less stringent than market expectations and their implementation has been spotty across the country so far.
Liu Jianwei, a senior statistician at the National Bureau of Statistics (NBS), said that the easing pace of month-on-month gains was a sign of slowing momentum, but warned that more needed to be done.
"There are still many cities seeing home prices rising and the property tightening campaign should continue to focus on implementation," Liu said in a statement accompanying the data.
Only Beijing has implemented a 20 percent capital gains tax on pre-owned home sales required by the central government, and has also required developers of big homes, commercial and office buildings to finish construction of at least seven floors before applying for pre-sales of the projects.
Smaller cities, meanwhile, more dependent on the property sector to raise revenue and often in hock with developers, have largely ignored the tax, according to media reports.
Average new home prices in 70 major Chinese cities rose 0.9 percent in May from the previous month, easing from April's month-on-month gains of 1 percent, according to Reuters calculations from data released by the National Bureau of Statistics (NBS) on Tuesday. Continued...