Price growth of China new homes slows further
Average increase weakens for second month to 11.1 per cent in February as tighter credit places pressure on developers to reduce housing costs
The mainland's housing price inflation eased last month for a second consecutive month as tighter credit weighed on home-buying sentiment and added to pressure on developers to cut prices before it is too late.
The latest data coincided with media reports that China Vanke, the mainland's biggest developer by revenue, priced a new project in Beijing lower than the market had expected, prompting speculation that price cuts that started in Hangzhou and Changzhou last month could spread to more developers in more cities.
It also followed reports on Monday that a privately held developer in Ningbo, a prosperous eastern city, had collapsed, with its largest shareholder detained.
"The property market will experience some kind of correction this year, particularly in the second half," said Lu Qilin, the head of research at Shanghai Deovolente Realty. "Slowing transactions, due to tighter bank lending, will strain developers' cash flow. Home prices at their current levels have also exceeded the reach of many buyers for self-use."
But Lu also said price trends could differ in different cities, or even in different areas of the same city this year.