Used home prices fall in Shanghai for first time this year

July housing costs in the city drop for the first time this year, but tight buying rules to remain

PUBLISHED : Tuesday, 12 August, 2014, 2:56pm
UPDATED : Wednesday, 13 August, 2014, 10:00am

Home prices in the secondary market dropped in Shanghai last month for the first time this year, but the decline in Beijing eased, the SCMP-CTC index shows.

The price for second-hand homes in Shanghai slipped 0.3 per cent to 34,665 yuan (HK$43,650) per square metre from June.

In Beijing, it fell 0.82 per cent to 40,905 yuan per square metre, according to the index, a collaboration between the South China Morning Post and Century 21 China Real Estate (CTC), a property consultancy.

The year-on-year price gains slowed last month to the weakest pace this year - 5.3 per cent in Beijing and 12.5 per cent in Shanghai.

"A property market warm-up in Beijing and Shanghai during the third quarter is still hard to see," CTC said.

The two top-tier cities dare not relax home purchase restrictions, and CTC does not see a return to universal mortgage rate discounts for buyers of first homes yet.

As a result, developers would be forced to cut prices at projects to be launched this quarter to achieve their annual sales targets, CTC said.

"If new home prices continue to fall, it will surely weigh down secondary home prices," it said.

The SCMP-CTC secondary home price index in Beijing fell to 156 last month from 157 in June. In Shanghai, it edged down to 143 from 144.

After six months of correction, sales started to increase in Beijing. Transactions rose 16.9 per cent to 9,155 units, but the figure was still 24.4 per cent lower than July last year.

However, transactions continued to drop in Shanghai, as rising prices in the first half kept potential buyers away.

Secondary home sales fell 0.9 per cent on the month to 12,989 units. Compared with a year ago, they were down 36.7 per cent.

Elsewhere across the mainland, CTC said many second and third-tier cities had either scrapped or relaxed home purchase restrictions.

Credit was no longer as tight as in the first half and transactions were expected to pick up in the coming months.

"Both the primary and the secondary home market will turn better in the second half," CTC said.