China home prices fall for 5 straight months

Home prices on the mainland fell the most in four months as developers extended price cuts to more cities, a survey showed, underlining the weakness in the sector which has dragged on economic growth although an easing in loan rates could nudge sales higher later this year.

The average price of new homes across 100 major cities tracked by the China Index Academy fell last month for the fifth straight month to 10,672 yuan (HK$13,492) per square metre, down 0.92 per cent from August, when it dropped 0.59 per cent from July. It was the biggest fall since May.

The People's Bank of China and the China Banking Regulatory Commission on Tuesday announced a long-awaited credit relaxation, redefining first-time homebuyers and lowering their mortgage rates to shore up the flagging industry.

Sales should begin to pick up after the rates are relaxed.

"We have seen potential buyers quicken their decision after the credit relaxation," said Andy Lee Yiu-chi, the chief executive for southern China at property agency Centaline China. "Sales of new homes in Shenzhen and Guangzhou handled by us were 30 per cent more before the credit loosening."

The relaxed mortgage policy should encourage buying interest among those upgrading their homes, Lee said.

Developers would also be considering action as they enter the last quarter of the year.