October 18, 2012 / 2:50 AM / 7 years ago

UPDATE 2-China Sept home prices flat on month, investment slows

* China Sept home prices -1.3 pct on year, flat on month

* Home prices rise in 31 of 70 cities in Sept vs 35 in Aug

* Jan-Sept property investment +15.4 pct vs +15.6 pct in Jan-Aug

* Sept property sales revenues +4.9 pct, down from +20.4 pct in Aug (Adds details)

BEIJING, Oct 18 (Reuters) - Home prices in China were broadly flat last month from August, calculations based on official data showed on Thursday, halting two months of upticks in a sign that government efforts to maintain strict controls on speculative activity are working.

Prices gained just 0.01 percent in September compared with August, following monthly gains of 0.1 percent in both August and July. Year on year, home prices across China fell 1.3 percent, according to Reuters calculations from official data.

Real estate investment, accounting for 14.4 percent of China’s gross domestic product in January-September, rose 15.4 percent in the first nine months from a year earlier, slowing from an annual increase of 15.6 percent in January-August, the National Bureau of Statistics (NBS) said on Thursday.

Despite the broader economic slowdown, the government has waged a campaign for two years to cool red-hot property prices, putting an extra brake on economic activity. Analysts say that has offset the impact of pro-growth policy easing.

“Since there is no let-up in property controls, home prices show signs of stabilising in September,” said Hui Jianqiang, research head at E-House China, a real estate information provider.

The month-on-month data show home prices in Beijing rose 0.1 percent, while those in Shanghai were flat. The two key cities saw year-on-year price falls of 0.5 percent and 1.6 percent, respectively.

Compared to a year ago, however, home prices are still falling nationwide. The 1.3 percent drop in September was the seventh such decline, according to Reuters calculations.

Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data. The NBS now only publishes price changes for each of the 70 major cities. New home prices rose in 31 of those cities month-on-month in September, down from 35 in August, the NBS noted.

Premier Wen Jiabao said on Wednesday that China will keep restrictions on the property market, dispelling any suggestion that the government would allow a rebound in the housing market by relaxing purchase restrictions.

China is on course for its weakest full year of growth since 1999, and analysts say relaxing property controls would be the surest way to put momentum back in the economy.

China’s deputy central bank deputy governor, Yi Gang, said last week that signs of resurgence in property prices posed a dilemma for policymakers and the government was in a delicate situation to maintain stability.

Under the banner of policy fine-tuning, China’s central bank cut interest rates twice in June and July and lowered banks’ reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan ($192 billion) for boosting loans. But it has refrained from cutting interest rates or RRR since July.

Instead, it has opted to inject short-term cash via open market operations into money markets to ease credit strains.

Rocketing property prices were a major consequence of China’s last economic stimulus effort, the 4 trillion yuan ($635 billion) package launched in 2008 at the depths of the global financial crisis.

RECOVERY OF LAND MARKET?

Real estate data released on Thursday also showed property sales in the country rose only 4.9 percent in September from a year earlier in value terms, a sharp drop from a rise of 20.4 percent in August, according to Reuters calculations based on NBS data.

Newly started property construction fell 8.6 percent in January-September, accelerating from a decline of 6.8 percent in the first eight months of the year. The amount of unsold property space grew to 327 million square meters by the end of September, up from 320 million square meters a month earlier.

The slide in sales, combined with mounting inventories, forced developers to slow their pace of expansion. Total land area bought by developers fell 16.5 percent in the first nine months from a year earlier, from an annual drop of 16.2 percent in January-August, the NBS data showed.

That contrasted with signs of a mild recovery in the real estate sector already flagged by private sector data and anecdotal reports.

Domestic media reported China’s major property developers have accelerated purchases of land parcels recently. China Vanke , the largest real estate developer by sales, bought four pieces of land worth 6.9 billion yuan ($1.1 billion) in the first half of September.

Revenues from land sales in China’s top 10 cities in the third quarter rose 123.8 percent from the second quarter, but were still down 28.3 percent from a year ago, according to data from local consultancy Home Link.

Officials from the Ministry of Land and Resources said last week that China’s land market has not yet fully recovered and that land prices will remain stable in the coming months.

$1 = 6.2545 Chinese yuan Reporting by Xiaoyi Shao and Koh Gui Qing; Editing by Lucy Hornby and Ian Geoghegan

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