* July home prices +0.7 on month vs +0.8 pct in June
* Prices rise +7.5 pct y/y in July vs +6.8 pct in June
* New home prices rise in 62 of 70 cities vs 63 in June m/m
* Signs of govt tolerance of a stronger property market
(Adds details, comments)
By Xiaoyi Shao and Benjamin Kang Lim
BEIJING, Aug 18 China's monthly property
inflation moderated for a fourth straight month in July,
although annual gains were the strongest this year, complicating
policymakers' task of trying to cool the sector without stifling
Real estate, which directly affects about 40 other business
sectors in China, is considered to be one of the crucial drivers
of activity in the world's second-largest economy.
Signs of a gathering recovery in the property market
coincide with other July data that suggested China may be
steadying after more than two years of slumping growth.
Average new home prices in 70 major Chinese cities climbed
0.7 percent in July on the month, easing from June's rise of 0.8
percent, according to Reuters calculations from data released by
the National Bureau of Statistics (NBS) on Sunday.
Compared with a year ago, new home prices rose 7.5 percent
in July, the seventh consecutive rise and the biggest jump since
the Reuters calculation started in January 2011.
"The July home prices in 70 major cities are still rising
due to strong demand from first-time home buyers and recent
rising land prices," Liu Jianwei, a senior statistician at NBS,
said in a statement accompanying the data.
Despite having enforced strict controls on the property
market for nearly four years, China still faces record home
prices that are well beyond the reach of most ordinary citizens.
Home prices rose month-on-month in 62 of 70 cities monitored
by the NBS in July, down from 63 in June, the NBS data showed.
New home prices in Beijing rose 14.1 percent in July from a
year earlier, the fastest this year, compared with June's
year-on-year increase of 12.9 percent.
Shanghai's prices were up 13.7 percent in July from a year
ago, also the fastest this year, versus 11.9 percent annual
growth in June.
China's failure to check house prices is partly due to
controls clashing with the need of local governments for a
buoyant property market where they can sell land to raise
Most cities have largely ignored a 20 percent capital gains
tax on pre-owned home sales introduced by the central government
in March. Only the capital city Beijing has implemented the tax.
The latest policy shift comes from the eastern city of
Wenzhou, which has relaxed curbs on property purchases to let
some people buy second homes.
But Wenzhou's property controls were always tougher than
those of other Chinese cities, which barred only third-home
purchases. So, its latest measure brings it in line with its
peers, including Beijing and Shanghai.
House prices in Wenzhou, the only city among 70 Chinese
cities to see annual price falls, dropped 2.4 in July from a
year ago, the NBS data showed.
Analysts say Wenzhou's move does not signal an imminent
easing in purchase curbs nationwide while investors increasingly
bet China could soon loosen its near four-year-old property
controls to shore up its economy.
Plans to raise funds announced since July by five property
firms, including Xinhu Zhongbao, have not been
carried out in the absence of approval from the securities
regulator, which has kept its ban on new funding for developers.
The property sector is a rare bright spot in China's slowing
economy, which is grinding this year towards its slowest annual
growth in 23 years.
Heated property demand stems largely from a lack of
investment options for domestic investors, with credit being
pumped into real estate for quick returns, rather than into
production, as exports and domestic demand slow.
Official data on July 9 showed revenues from Chinese
property sales rose 37.8 percent on the year in the first seven
months, easing from a 43.2 percent rise in January-June, though
it was still higher than last year's 10 percent gains.
"In the coming months, we expect (property) sales growth to
slow while new starts continue to recover at a modest pace to
catch up with solid sales given the sentiment getting improved,"
UBS economist Tao Wang said in a note to clients before the data
"Property activities continue to be an important source of
stable growth in domestic demand," Wang added.
A July statement by the Chinese Communist Party's
decision-making Politburo made no mention of a continuation of
property controls, raising analysts' hopes that the government
would avoid new real estate curbs, and perhaps even loosen up.
China does not have an official index for nationwide home
prices. Reuters started its weighted China home price index in
January 2011 when the NBS stopped providing nationwide data,
only giving home price changes in each of 70 major cities.
(Reporting by Xiaoyi Shao and Benjamin Kang Lim; Editing by