Home prices in China drop for third month

PUBLISHED : Friday, 02 December, 2011, 12:00am
UPDATED : Friday, 02 December, 2011, 12:00am


Home prices in China fell last month for the third consecutive month, signalling that the government's measures to cool the overheated property market may be working.

The China Real Estate Index, a measure of property prices compiled by the China Index Academy, showed that in 100 key cities the average home price was 8,832 yuan (HK$10,784) per square metre last month. That was down 0.28 per cent from October.

In the 10 biggest cities on the index, the average cost of a home dropped 0.36 per cent to 15,663 yuan per square metre. The sharpest falls were in Nanjing and Chengdu, which declined 1.2 per cent and 0.9 per cent, respectively.

Property news website SouFun reported that major developers such as Greenland, Longfor and China Vanke had cut the asking prices at new projects by more than 20 per cent in recent months.

In second and third-tier cities, many small developers are offering bigger discounts to lure buyers, with some cutting their asking prices by about 20 per cent last month.

Li Wenjie, a general manager at Centaline (China) Property in Beijing, said there were more than 120,000 unsold units of new projects in Beijing, the most in five years.

'There is too much stock. Housing demand has been dampened by the restrictions on buying second homes and on property loans. I believe the fall in property prices will continue next year,' Li said.

He expects Beijing property prices to drop more than 30 per cent by the end of next year, reverting to their mid-2009 price levels.