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By Bloomberg

Chinese cities where home prices rose exceeded those where they declined for the first time in 16 months in July, as authorities removed some property curbs and interest rates fell.

New-home prices rose in 31 cities of the 70 the government monitors, from 27 the previous month, according to data released by the National Bureau of Statistics on Tuesday. They dropped in 29 and were unchanged in 10.

Prices, led by some of the biggest Chinese cities, extended gains from the second quarter, spurred by the easing of mortgage policies at the end of March and four reductions in borrowing costs since November. The trend will continue this year as liquidity remains ample and expectations of rising prices further prompt more people to buy, overriding any potential impact from a devalued yuan and a stock-market selloff, according to Mizuho Securities Asia Ltd.

“The average price gains may accelerate in the second half as prices in the second- and third-tier cities are just starting to rise,” Alan Jin, a Hong Kong-based real estate analyst at Mizuho, said by phone. “The demand is still there.”

The average price of the 70 cities rose 0.17 percent from June, gaining for a third consecutive month, according to Bloomberg calculations of official data. Prices in Sanya, a tourist city on the southern Hainan island, climbed 0.2 percent, reversing declines since at least August last year.

‘Increasingly Positive’

Loosened policy restrictions will have an “increasingly positive impact” on property sales in the second half of the year, Standard & Poor’s said in an Aug. 14 report, raising its forecast for full-year sales to a gain of as much as 10 percent from a decline. The average selling price may rise 5 percent, the rating company said, compared to its previous projection of declines of as much as 5 percent.

A stocks selloff in the middle of the year that wiped more than $3 trillion of market value hasn’t disrupted the property recovery, and China’s first major currency devaluation since 1994 this month will hardly do so either as most homebuyers are domestic owner-occupiers, according to Mizuho.

Property sales in 35 cities tracked by SouFun Holdings Ltd. jumped 37 percent last week from a year earlier. “Summer sales this year look great” for a traditionally slow season, Jin said.

“The market performance has clearly beaten our expectations in the beginning of this year,” Jeffrey Gao, a Hong Kong-based analyst at Nomura Holdings Inc., said before the data release. “Contracted sales of many developers may exceed full-year targets.”

Big Cities

New-home prices in the southern business hub of Shenzhen jumped 6.2 percent from a month earlier, slower than the 7.1 percent surge in June. They gained 1.6 percent in Shanghai, 1.1 percent in Beijing, and 1.2 percent in Guangzhou, all slowing from the pace in the previous month.

Beijing tightened its home-purchase restrictions in Tongzhou on Aug. 15 after news about the city government’s relocation to the former suburban district pushed up local housing prices.

Year-on-year, new-home prices rose in three cities in July, compared with two in June, the statistics bureau said.

Average new-home prices in 100 cities tracked by SouFun, which owns China’s biggest property website, rose 0.54 percent in July from June.