New home prices increase in August

New home prices rose in August for the first time to a level higher than a year earlier, after a slew of policy measures announced by the government helped prop up sales.

New home prices rose in 35 cities of the total 70 tracked, compared with 31 in July, the National Bureau of Statistics said on Friday. The rise in the number of cities that saw price increases helped push average prices 1.7 percent higher than a year earlier, compared with a 0.4 percent fall in July.

Average prices rose 0.17 percent in August from July, gaining for a fourth consecutive month, according to The Wall Street Journal's calculations based on official data. That followed a 0.15 percent gain in July and a 0.16 percent increase in June. Compared with previous months, first-tier cities posted weaker gains. Home prices in Shenzhen moderated to about 5.2 percent after rapid surges in earlier months. Prices in Shanghai increased 1.6 percent over July and in Beijing by 1.3 percent.

While prices in most smaller cities have just recouped their previous loss, prices in first-tier cities were already much higher than the level a year ago. The average price of pre-owned homes in Shenzhen was 30.3 percent higher than a year ago. In Beijing, it was 14.1 percent higher, while in Shanghai it rose 6.9 percent.

The price pickup and months of robust sales were fueled by the five interest-rate cuts since November and the easing of various restrictions. These included removal of the restrictions on home purchases by foreigners and the lowering of down payments for those who use their housing provident funds to buy a second home to 20 percent from 30 percent in August.

However, the improving sales have not translated into a revival of realty investments, which expanded just 3.5 percent in the first eight months, the slowest pace since 2000, according to the NBS.