Price cutting on new homes lowers market
Figures from smaller mainland cities reveal a month-on-month fall in average sale prices
Price cutting on new homes in the mainland's second-tier and third-tier cities has resulted in more cities recording falls in property prices last month.
Figures from the National Bureau of Statistics, which monitors month-to-month property price movements in 70 major cities, showed 24 cities recorded an average decline in prices, as compared with 20 in August.
Only 31 cities recorded an increase in prices of new homes last month, while 36 did in August, which was also fewer than in the previous month. The greatest average increase of any city was just 0.4 per cent last month, compared with 0.6 per cent for the month of August.
Prices in the remaining 15 cities stayed flat.
"The second-tier cities, such as Dalian, don't have enough population," said Meggie Qin, head of research in Beijing for Jones Lang LaSalle. "The housing demand is limited. Their high-end residential properties rely on demand from buyers from other cities. Developers have to cut the asking prices to lure buyers.
"Developers in first-tier cities cut prices in the second quarter but stopped cutting prices in the third quarter after transactions rebounded."
As a result, property prices in first-tier cities continued to rise last month, except in Shanghai, where they remained unchanged.
In the secondary market, Shenzhen prices stayed flat. The other three first-tier cities recorded smaller price increases in second-hand homes. In Guangzhou, prices rose 0.6 per cent last month, compared with 0.9 per cent in August. Prices in Beijing and Shanghai edged up 0.1 and 0.2 per cent, respectively.
"Potential buyers have adopted a wait-and-see attitude to the market," said Dickson Wong Hung, chief executive at Centaline (China) for northern and southwest China.
"Property sales in the past two months decreased. There were about 12,000 deals recorded in Beijing in September, 20 per cent less than a month earlier. In the first 17 days of October, there were only 3,000 deals.
"It was because the government's cooling measures for the property market have continued and the banks did not relax mortgage requirements for buyers."
Wong says he expects property sales to stay at a low level in this quarter.