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Home prices in cities drop at slower pace

By Zhao Qian (Global Times)

08:04, June 19, 2012

Home prices in the country's 70 major cities declined at a slower pace in May for the second consecutive month, as demand for apartments rose and monetary policy easing boosted market confidence, according to an official monthly survey released yesterday.

A total of 43 out of the 70 large- and medium-sized cities witnessed a drop in newly built home prices in May month-on-month, the National Bureau of Statistics (NBS) said in a report yesterday. The number of cities reporting price drops remained unchanged from April, and a little lower than 46 in March.

Six cities saw monthly prices of newly built homes rise in May. There were three in April.

Prices of existing homes fell in May in 30 of the major cities, while the number in April was 33. A total of 18 cities posted monthly rises in existing home prices in May, compared with nine in April, the data showed.

"There are signs that home prices might possibly rise if sales continue to grow fast," Chen Xue, an analyst from property brokerage Homelink, told the Global Times yesterday.

New home sales in 20 major cities including Beijing and Shanghai reached 106,840 units in May, increasing by 26.8 percent over the previous month, according to a research report released by Homelink.

"Demand for homes has accumulated since the government launched property curbs," Chen noted.

"An easing of monetary policy, which gives homebuyers easier access to loans, has boosted market expectations of a home price rebound," Li Yuan, research director at Centaline China Real Estate, told the Global Times yesterday.

The People's Bank of China (PBC) cut the reserve requirement ratio for banks by 0.5 percentage point on May 18, the second time this year.

The PBC also cut benchmark deposit and lending rates by 25 basis points on June 8.

As a result, the annual interest rate on home mortgages of over five years declined to 6.8 percent, which has lessened the burdens on homebuyers.

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