China home prices fall for 5 straight months
Survey shows 0.92 per cent drop in cost of new homes in September, the biggest in four 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.
"To increase cash flow, developers will offer bigger discounts to drum up sales during the week-long National Day holiday," the index academy said on Wednesday. The holiday ends on October 7.
Under the new rules, those who have fully paid their mortgages will be considered first-time buyers, allowing them to make a down payment of 30 per cent instead of 60 per cent.
Mortgage loan rates will also be at a 30 per cent discount to the benchmark rate, against 15 per cent previously.
Of the 100 cities, 79 including Beijing, Shanghai and Guangzhou saw prices drop while the rest fell. With the exception of Shenzhen, prices fell sharply than in August in all top 10 cities as developers offered extra discounts to entice buyers.
Prices in Shenzhen rose 0.09 per cent, the academy said, adding that the relaxation of the mortgage policy and loosening of home purchase restrictions in many cities would boost "sales in the short term".
Another survey by E-House China covering 288 cities showed prices of new homes continuing to slide last month, by 0.25 per cent from August.
"It is the sixth [consecutive] month of decline," E-House said.
Its figures also showed prices fell at a slower pace in Beijing and Guangzhou. Shanghai saw a sharper drop of 0.15 per cent, after 0.06 per cent in August.