Home prices continue slide in biggest mainland cities

PUBLISHED : Thursday, 02 February, 2012, 12:00am
UPDATED : Thursday, 02 February, 2012, 12:00am


Home prices on the mainland dropped for a fifth month in January under the government's tightening measures, with Beijing, Guangzhou and Wuhan recording the largest falls of the country's 10 biggest cities.

Average home prices nationwide slid by 0.18 per cent last month from December to 8,793 yuan (HK$10,816) per square metre, according to a study released yesterday by China Real Estate Index System, a unit of online property news agency SouFun Holdings. The figure was 1.7 per cent higher than a year earlier, the slowest pace of growth since August 2011.

Of all the 100 cities covered in the study, 60 saw home prices decline, the same as in December.

The mainland property market is expected to be under pressure in the coming months as the government vows to continue austerity measures, including restriction on investment homes and raising mortgage rates.

Premier Wen Jiabao reiterated in a State Council meeting on Tuesday that the government would maintain curbs on the property market to stamp out speculative demand and bring home prices down to a reasonable level.

'Home prices are falling and transaction volumes are shrinking,' said Alan Chiang Sheung-lai, head of residential property at DTZ. 'I think this trend will continue in the first half of this year.'

He expects some 'minor relaxations' to monetary-tightening measures as the government moves to boost the economy.

'Restrictions on purchases may be removed in certain places and the banks may make it easier for first-time home buyers to apply for mortgages. Yet the government would make sure the loosening will only benefit those with a real need for a home,' said Chiang.

According to the study, home prices in Beijing fell 0.26 per cent last month to 22,810 yuan per square metre compared to December last year. House prices in Guangzhou and Wuhan dropped 0.3 per cent and 0.34 per cent, respectively. Costs in Shenzhen were the highest of all surveyed cities, it said.

Home sales in the mainland's four biggest cities were sluggish during the week-long Lunar New Year holiday last week. Transactions in Beijing, Shanghai, Guangzhou and Shenzhen fell 66 per cent to 109 units compared with the holiday period a year earlier, said Centaline Property Agency, one of the country's biggest real-estate brokers.

The mainland's outstanding property loan growth slowed last year by 13.5 percentage points from 2010, the central bank said on Monday.