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China’s housing market recovery eases on reclining stimulus in major cities

China’s housing market recovery has slowed, tapering off the gains achieved during the first half of 2016. Easing stimulus measures from the government to buy housing properties in major cities have led to a flux in the Chinese real estate.

New-home prices excluding government-subsidized housing climbed in 60 cities in May, down from 65 in April, among the 70 tracked, the National Bureau of Statistics said Saturday.

According to Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd, with a growth target of 6.5 percent in the housing sector, the government is required to pump in more measures to achieve the targeted rate of growth.

Faced with a massive pile of housing inventories in smaller cities, the government and the central bank, since late 2014, had unleashed a range of measures aimed at improving demand for homes to clear the overhang. Still, the recovery in housing prices abated last month as local governments chalk out certain curbs on real estate sector in major cities like Shanghai and Shenzhen.

Following certain tightening measures across the largest cities, price gains have started to slow in the recent times. Values rose 2.3 percent in Shanghai, a slower pace than in April, while Shenzhen saw a gain of 0.5 percent, down from 2.3 percent the previous month.

The port city of Xiamen in the southern province of Fujian led gains in May, with prices climbing 5.5 percent from April and 28.3 percent from a year earlier. Hefei, the capital of the eastern province of Anhui, saw a gain of 5.1 percent from the prior month and 23.3 percent from a year earlier.

Meanwhile, existing home prices in May rose in 49 cities, compared to 51 in April. They dropped in 13 cities, while remaining unchanged in eight. 

Prices in May gained in 74 cities among the 100 tracked by SouFun Holdings Ltd., the owner of China’s biggest property website, compared with increases in 71 the previous month. Average new-home prices rose 1.7 percent, a slower pace than increases of 1.45 percent seen in March.

"The question in big cities for officials will be how to curb prices, while in some of the smaller places prices are too high for inventory to come down," said Niu Li, Economist, State Information Center affiliated to the National Development and Reform Commission.

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