A potential homebuyer takes a photo of a property display model in Beijing. Home prices have continued to increase in most major cities across the country despite the central government’s efforts to curb rising housing prices. FAN JIASHAN / FOR CHINA DAILY

Housing costs in 63 major markets  increased in June, but more slowly

Property market statistics on the nation's 70 major cities show that fewer urban centers recorded month-on-month gains in the prices of housing projects and pre-owned homes in June.

Data released by the National Bureau of Statistics on Thursday show that of the 70 major cities the bureau tracks, 63 cities' new home prices increased in June month-on-month, five other cities saw declines and the remaining two were flat.

Only Wenzhou in Zhejiang province experienced a drop in new home prices in June from the same period last year, while all 69 other cities reported hikes.

Beijing, Guangzhou and Shenzhen led the price increase for new properties, up 16.7 percent, 16.5 percent and 16 percent year-on-year, respectively.

"The month-on-month figure is more credible because property prices last year were at a low level," said Chen Sheng, vice-president of the China Real Estate Data Academy.

Liu Jianwei, a senior statistician with the NBS, explained the figures showed price rises continued to decelerate in June because fewer cities saw price rises compared with May, both for new and pre-owned houses.

Two more cities reported month-on-month decreases for new apartments, and five more cities' pre-owned home prices fell month-on-month.

There were 38 cities where new home prices increased by lower rates than in May. For pre-owned houses, 34 out of the 70 cities' increase rates dropped.

First-tier cities are the growth drivers for residential prices because in spite of potential risks, developers are still focusing long-term on these cities, said Lu Qilin, research director at Shanghai Deovolente Realty.

Analysts said Wenzhou being the only city to see a year-on-year decrease for new home prices was the result of its property bubble.

"The housing prices in Wenzhou are expected to decrease slowly as the bubble got too big in the past three years, and the confidence of investors has sharply weakened," said Yao Rulin, the general manager of Faith-Trust Real Estate Development Co Ltd, which runs three residential projects in Wenzhou.

Yao added that developers will be more inclined to offer smaller apartments of 90 to 120 square meters to meet inelastic demand from buyers instead of luxurious, large villas.

Property price growth rates will slow to within 5 percent in the second half, from more than 10 percent in the first six months, according to a report from the China Index Academy, a real estate research institute.

Chen said he is especially worried about 2014, as GDP might grow less than 7 percent.

"Real estate cannot be healthy if the macroeconomy and all other industries are not fit. I am really looking forward to economic and industrial restructuring policies of the central government, which will be crucial to the nation's economic health," said Chen.

Yu Ran in Shanghai contributed to this story.