Thu, Mar 19, 2015 - Page 15 News List

Falling prices of Chinese homes to recover: experts

Reuters, HONG KONG

China’s average new home prices fell at the fastest pace on record last month from a year earlier, hurt by slower sales during the Lunar New Year holiday, but developers and analysts expected prices to slowly recover — particularly in top-tier cities.

Average new home prices in China’s 70 major cities dropped 5.7 percent last month from a year ago, the sixth consecutive fall, following January’s 5.1 percent decline. It was the biggest annual decline in the nationwide survey since it began in 2011.

The monthly fall last month from January was 0.4 percent, the same as in the previous month, and pointing to sustained risks to the government’s new 7 percent economic growth target for the year. The property sector accounts for about 15 percent of China’s GDP.

The record fall coincided with news that Chinese banks have extended Evergrande Real Estate Group (恆大地產集團) 100 billion yuan (US$16 billion) in credit, as the real-estate slump extends to one of the country’s biggest and most indebted property developers.

Chinese real-estate stocks jumped in response to the price news, with the Bank of Communications Ltd (交通銀行) expecting the government to announce more measures to bolster the market, including lowering taxes and loosening requirements for mortgage lending.

Data from China’s National Bureau of Statistics showed new home prices in Beijing fell 0.2 percent between January and last month, accelerating from a 0.1 percent fall in January from December last year, while Shanghai prices fell again by 0.1 percent after stabilizing following eight straight month-on-month falls.

Westpac Global Economics said in a report that home price consolidation was limited to tier 1 markets.

“Outside the wealthier coastal cities, the process of clearing excess inventory requires further discounting at the new end, and lower asking prices in secondary markets,” the report said.

Of the 70 major cities the bureau monitors, 66 posted a monthly decline, up from January’s 64.

Bureau senior statistician Liu Jianwei (劉建偉) yesterday said in a statement that sales this month would show a significant seasonal rebound from last month’s Lunar New Year pause.

Sales volume in 40 major cities monitored by housing data company China Real Estate Index System rose 51.6 percent in the first week of this month compared to the previous week, while they rose about 23 percent in the second week. Most of the rise came from first and second-tier cities.

“Although the overall market eased in the beginning of the year, as policies loosen further and new launches pick up in March, the property market is expected to see a recovery,” the firm said.

Sino-Ocean Land Holdings Ltd (海洋地產控股) also forecast a slight rise in prices for top-tier cities this year in an earnings statement on Tuesday.

Shanghai-based developer CIFI Holdings Group Co (旭輝控股集團) last week said it plans to raise prices by 10 to 15 percent this year.

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