China property

Falls in mainland China new home prices ease

Hopes of an immediate strong recovery continue to be weighed down by record high inventories

PUBLISHED : Thursday, 18 December, 2014, 11:20am
UPDATED : Saturday, 18 April, 2015, 6:09pm

The drop in mainland home prices eased slightly for the third straight month in November following the government's measures to shore up the property market, but record high inventories continue to weigh on hopes of an immediate strong recovery.

Among the 70 major cities monitored by the National Bureau of Statistics, 67 suffered month-on-month drops in new home prices in November, compared with 69 in October. Prices were unchanged in the remaining three - Shenzhen, Nanjing and Hefei.

The secondary market performed better.

Prices of used homes saw month-on-month increases in six cities - Beijing, Shanghai, Shenzhen, Nanjing, Zhengzhou, Nanning and Xining.

Prices of used homes in Beijing rose 0.7 per cent in November from October, compared with October's increase of 0.3 per cent.

"A slew of policies have had a positive impact on property sales, with new home sales in 70 cities rising in November from October and hitting this year's highest level," senior statistician Liu Jianwei said.

"The month-on-month fall in home prices narrowed further. But prices continued to fall on year-on-year terms due to the high base of comparison during the same period last year."

The People's Bank of China cut interest rates last month for the first time in more than two years as part of its efforts to stimulate housing demand.

Local governments have also rolled out supportive measures, including tax cuts and cash subsidies, as well as easier mortgages.

As a result, the biggest month-on-month drop in new home prices in these 70 major cities eased to 1.4 per cent in November, the lowest level since May.

On year-on-year terms, new home prices fell in 68 cities last month, up from October's 67.

Yao Jingyuan, the agency's former chief economist and now an adviser to the cabinet, yesterday said he expected no further policy support next year to boost the property market.

As the mainland's housing demand is now increasingly driven by end-users rather than those betting on capital gains, third- and fourth-tier cities will suffer bigger drops in home prices than the first-tier ones, Yao added.

Prices of new homes fell 0.3 per cent in Beijing last month from October, and dropped 0.5 per cent in Shanghai, compared with the previous month's decline of 1.3 per cent and 0.7 per cent respectively.

However, Wang Tao, chief economist of UBS, said in a note: "To help accelerate the digestion of inventory, we believe the government is likely to deliver additional property policy support."

Options included a cut in down payments, the removal of property-related transaction fees and taxes, as well as further targeted mortgage rate cuts, Wang added.