(Yicai Global) Nov. 11 -- There was an uptick in China’s real estate market in October as household loans, mostly in the form of mortgages, swelled for the first time in six months.

Medium-term household loans advanced by CNY422.1 billion (USD65.9 billion) in October from the same period last year and long-term ones by CNY16.2 billion (USD2.5 billion), the People's Bank of China said yesterday. Personal mortgages increased by CNY101.3 billion month on month to CNY37.7 trillion (USD5.9 trillion).

The growth has to do with the central bank including real estate in its regular quarterly meeting for the first time in over ten years in September, said Ma Hong, senior analyst at Zhixin Investment Research Institute. The central bank said at the time that it will “maintain the healthy development of the real estate sector and the lawful rights and interests of residential housing consumers.”

The improved data reflects people’s increased willingness to buy property, said Zhang Xu, chief fixed-income analyst at Everbright Securities.

China's credit growth may quicken in the final two months of the year as monetary policy promotes financial institutions' increased support of the real economy, market analysts said.

However, policy adjustments are facing bigger tests as there are still many unbalanced factors in the recovery of the Chinese and overseas economies despite the improvement in domestic credit supply and demand last month, they said.

Recent hikes in the prices of energy and raw materials have hit some small enterprises, said Wen Bin, chief researcher at China Minsheng Bank. Economic growth is under big pressure as the continuous drop in narrow money M1, which includes currency and assets that can be quickly converted into cash, and the change of credit structure indicates weaker business operations and falling real economy demands.

Improved Data

However, despite the reservations, last month’s data smashed expectations. The supply of M2, a broad measure of money supply that covers cash in circulation and all deposits, grew by 8.7 percent year on year, 0.4 percentage point faster than in September and more than the 8.3 percent predicted by a Yicai Global poll of chief economists.

Social financing, a broad gauge of credit and liquidity in the economy, surged by CNY1.59 trillion (USD248.2 billion), up CNY197 billion year on year, and higher than the CNY1.46 trillion anticipated by the Yicai Global poll. Chinese yuan-denominated loans advanced by CNY826.2 billion, CNY136.4 billion more than a year ago, and topping the CNY800 billion forecast.

New loans to the real economy increased CNY775.2 billion last month, CNY108.9 billion more than in September, the central bank said.

Editors: Xu Wei, Kim Taylor