China's real-estate market, after experiencing a 2-year recession, appears to be warming up again. The bounce has temporarily eased both domestic and international concerns over China’s slowing economy. From Bob Davis and Esther Fung at Wall Street Journal:
According to a survey of property developers and real-estate firms, the average price of housing in 100 major Chinese cities rose in June from May, after nine straight months of decline. The survey follows other signs that the Chinese market has bottomed out, including a pickup in real-estate investment in May and a far shallower decline in property sales during that month compared with April.
Internationally, steel, iron ore, copper and other commodities depend on the Chinese real-estate market for growth, as do construction-equipment makers in the U.S. and Europe.
According to the WSJ, the fluctuation in China’s housing prices can be partly attributed to government control of the economy. The recession started when the government tried to end speculation in the real-estate business by raising mortgage rates. Yet to prevent the economy from stalling, the government is now beginning to cautiously re-stimulate housing market.
Since 2010, the Chinese government has tried to deflate what had become a housing bubble without battering the Chinese economy. The campaign was aimed primarily at the high end of the real-estate market by making it much more difficult to speculate in real estate by buying multiple apartments. The government raised down payments for second homes to 60%—twice as high as for first homes—among other measures.
That [the slowing economy] has prompted Beijing to focus more on growth, easing monetary policy and approving a number of investment projects…The cities of Chongqing, Wuhan and Zhengzhou, for instance, have allowed first-home buyers to borrow more from government-sponsored savings funds. Banks are also permitted to discount mortgage rates up to 30% for first-time buyers.
Read more about China’s housing policies via China Digital Times.