The average price of housing in 70 cities in China increased in July for the second straight month leading to speculation that property prices have already bottomed out. However experts feel the government is unlikely to let prices rise to much, and will act to curb any return to speculative buying.
Data provider China Real Estate Index System surveyed real estate firms and property developers and found the average price of housing was $1,369 per square metre in July, an increase of 0.33% on June.
Analysts have also noticed some property showrooms have been very crowded during project launches, as an easing of property curbs seems to have resulted in increased sales numbers which in turn is driving up prices. Property prices rose in 70 cities, but fell in 30 cities compared to the previous month. The largest increases were seen in smaller cities, with Liaocheng and Wuhu city posting increases of 2.7% and 2.67% respectively.
These price increases haven't gone unnoticed by central government who is already warning local governments to tighten up the property curbs.
The news for August may be a little better for the government as it's typically quiet and prices could moderate. Overall experts still think there could be some downward pressure on prices, and that average prices will remain flat compared to the last few years.
The government still remains adamant over curbing investment demand and is doing its best to make sure that homes are for real use rather than just for investment. It predicted that inventory levels will peak during the fourth quarter and that this will keep prices from rising too quickly.
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