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China Home Sales Surge on Easing Regulations and developer Discounts

Home sales in China went up 33 percent in June after local governments started easing the stringent property regulations and allowed developers to offer discounts to boost home buying activity.

Home sales reportedly bumped up to $95.2 billion in June from the $71.8 billion recorded in May, making it the first biggest gain in the past five months, according to the country's National Statistics Bureau data.

According to Bloomberg, developers are now marketing vacant properties for low prices, which are luring in buyers and have helped spike home sales. Also, the government of China has called on banks to loosen the grip on granting mortgages.

Experts see the increasing sales as a positive economic indicator.

"We are seeing signs the market is stabilizing. A series of property indicators are likely to narrow losses further in the second half given the economy and credit conditions are improving," Johnson Hu, an analyst at CIMB Securities Research, told Bloomberg in a telephone interview.

Property sales in China had been mapping a steep downward journey after the government imposed strict curbs on purchases. In fact, many couples were divorcing to just buy a property each.

But, the selective curbs easing and the prevailing discounts have slowed down the pace at which sales were falling, The Wall Street Journal reports.

Analysts believe that home sales will continue to pick up and post a strong growth in the third quarter. They also believe that the central government's decision to loosen financial policies will affect the property market positively.

"My take on this is we need not worry or read too much into this because like all things in China, things happen slowly. It's a long line of adjustments and it will take shape," said David Ji, head of research & consultancy of Greater China at Knight Frank, to CNBC.

"Policy is working, things need to be digested and in future, things will work out," he added.

Indeed, the government stimulus is paying off. Just in line with the home sales report, it was revealed that China's economy grew 7.5 percent in the period of April to June, a faster and better-than-expected rate.

"The recovery is quite dependent on government support. So I think the government can choose either to tolerate lower growth, or do more stimulus to achieve their growth target," Chang Jian, an analyst at Barclays Capital in Hong Kong, told Reuters.

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