China home prices drop again in October
Mainland home prices fell more slowly for a second straight month in October, official data showed yesterday, but analysts do not expect prices to rise in the next few months because developers remain under pressure to sell down record inventories.
New home prices fell, month on month, in all but one of the 70 major cities tracked by the National Bureau of Statistics, the same number as in September. It was the sixth consecutive month of declining home prices but they fell 0.3 percentage point slower than in September.
"Many cities have changed their mortgage policy, developers have stepped up launches of new projects to sell down inventories, and some homebuyers have come back to the market," senior statistician Liu Jianwei said. "Therefore the month-on-month decline narrowed."
Data from consultancy E-House (China) showed 10 key cities approved 23.6 per cent more new property supply last week than in the previous week and transactions rose in cities such as Shanghai and Guangzhou.
The NBS said the steepest month-on-month fall in new home prices last month was 1.6 per cent, down from September's 1.9 per cent decline, August's 2.1 per cent and a peak of 2.5 per cent in July. Qinhuangdao, in Hebei province, saw the steepest decline last month.
The mainland property market started to crack in February due to a glut of supply.
"The slowing rate of price drops signals a promising recovery in demand, especially with incentives such as year-end sales and discounted mortgages being introduced by developers and lenders," said William Taam, an executive director for Asia at global natural and built-asset consultancy Arcadis.
Ratings agency Moody's last week maintained its negative outlook for the mainland's property sector. It said high levels of inventory and tight liquidity would force developers to offer promotions or discounts to speed up sales - prompting a moderate decline in property prices in the next 12 months.
Pointing to more signs of stabilisation, the NBS said prices for second-hand homes rose 0.3 per cent in Beijing - the first increase since April. They also rose in Hangzhou, but remained flat in Shanghai, Guangzhou, Shenzhen and Shenyang.
"Along with improving property sales, the easing of property price deflation would suggest reduced tail risk from the housing downturn," investment bank Societe Generale said in a report.
Previously released official data showed residential property sales fell 9.9 per cent year on year in the first 10 months of the year, better than the 10.8 per cent fall seen in the first three quarters.
In year-on-year terms, average new home prices fell for the second month in a row in October, with the downward trend widening to 67 cities from 58 in September and 19 in August, due to the high base of comparison last year, when the market was still booming.
Banks have loosened mortgage policies in major cities after the central authorities abandoned their property tightening stance at the end of September. Cities are still rolling out more supportive measures, such as tax cuts and outright cash subsidies, to revive a property market that is crucial to growth in both the broader economy and government revenue.