Salient to Investors:

New home prices in Beijing, Shanghai and Guangzhou posted the biggest gains in May since at least January 2011, and 69 of 70 cities tracked showed increases, the most since August 2011.

Zhang Zhiwei at Nomura said China’s dilemma is that it is difficult to tighten the property market, which it needs to bolster the economy, which has a strong reliance on property. Zhang said local governments are reluctant to enforce policies aimed at cooling the housing market.

Guangzhou prices rose 15 percent from a year earlier, Beijing 12 percent, Shanghai 10 percent.

Knight Frank said home prices in China had the biggest quarterly gain among 55 countries globally in Q1 2013, based on Beijing and Shanghai prices.

Charlene Chu at Fitch  said we are starting to see liquidity issues.

Investment banks from Morgan Stanley to Barclays are cutting 2013 growth forecasts.

Jenny Huang at SinoPac Financial expects property prices to start stabilizing by the end of the year as it takes time for the market to adjust to policies. Huang said economic indicators still point to a weak economy.

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