China’s Property Prices Fall, Mixed Signals on Stimulus from Chinese Authorities

Markets are in a state of bacchanalia in celebration of the pro-austerity pro-bailout parties in Greece.

Bad news is good news even in China.

China property markets remains stuck in a muck.

A fresh report from Bloomberg,

China’s home values fell in a record 54 of 70 cities tracked by the government in May as developers cut prices to boost sales amid housing curbs.

The eastern city of Wenzhou led declines with a 14 percent slump in values from a year earlier, while Beijing and Shanghai recorded losses of as much as 1.6 percent, according to data released by the statistics bureau today.

China has pledged to maintain its curbs on the housing market even as economic growth is slowing, prompting the central bank to cut borrowing costs for the first time since 2008 on June 7. The Housing Ministry said this month that China will steadfastly continue with its property curbs that have so far included higher down payments and restrictions on the number of homes being bought.

Another report from Bloomberg said that China won’t engage in the same degree of stimulus as she had in 2009.

Premier Wen Jiabao has an unspoken message to his Group of 20 counterparts in Mexico today: This time, don’t count on a growth bailout from China.

In the depths of the 2008 credit crunch, Wen’s 4 trillion yuan ($586 billion) fiscal injection over two years and 17.6 trillion yuan credit surge helped prop up the global economy. In China, it fueled a property bubble, stoked inflation and amassed bad debts that Fitch Ratings says weakened the banking system…

China has accelerated approvals for wind farms, hydropower plants, airports and steel mills endorsed in its five-year plan through 2015. The government released 66 billion yuan in funding for 2.3 million low-cost houses, and will allocate a 26.5 billion yuan subsidy for eco-friendly household appliances and 6 billion yuan to stimulate sales of energy-efficient vehicles.

Policy makers have relaxed lending rules for banks and expanded loans for first-home buyers to try to support the property market without fueling the speculation that drove up house prices in 2009.

While China’s equity benchmark seems to have partaken in today’s revelry, mixed signals from China’s political authorities don’t seem encouraging.

I guess the actions in the financial markets over the next few weeks should give us a better picture.