Sun, Oct 09, 2011 - Page 11 News List

Home prices drop in China for first time in one year

Bloomberg

China’s home prices fell 0.03 percent from a month earlier last month, the first decline in a year, said Soufun Holdings Ltd (搜房網), the country’s biggest real-estate Web site owner.

Residential prices rose in 54 of 100 cities tracked by Soufun and fell in 44 cities, with average home values nationwide at 8,877 yuan (US$1,396) a square meter, Soufun said in an e-mailed statement yesterday. Compared with the same month last year, average prices rose 6.15 percent, Soufun said.

China’s efforts to control its property market are at a critical stage and the nation needs to focus on curbing price increases in less-affluent cities, Chinese Premier Wen Jiabao (溫家寶) said on Sept. 1. The government said in July that it would rein in residential prices in smaller cities after it raised down-payment requirements and mortgage rates earlier this year.

Yesterday’s statement showed that price data remain mixed. Among the 10 largest cities, home prices last month dropped 0.23 percent in Shanghai from August and slid 1.39 percent in Chongqing, while Beijing saw a 0.24 percent increase. Compared with September last year, home costs climbed in all 10 cities.

DEADLOCK

China’s property market is in a “deadlock” as demand remains strong even after the government limited the number of homes individuals can buy and tried to cap price gains, State Council Development Research Center deputy director Lu Zhongyuan (盧中原) said at a briefing in Beijing last week. The government will probably maintain property curbs into next year, Lu said.

Housing transactions in Beijing during the first six days of this month plunged 62 percent from the same period last month and shrank nearly 10 percent on year, the Beijing Times reported yesterday, citing local government data.

‘SEVERE’ OUTLOOK

Chinese developers face an “increasingly severe” credit outlook, which may force them to cut prices and turn to costlier sources of funding as sales weaken, Standard & Poor’s said on Sept. 27.

“The worst isn’t over for China’s real-estate developers,” S&P analysts led by Frank Lu (陸楓) wrote in a report. “Developers are bracing themselves for slower sales and lower property prices ahead.”

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