Average new home prices across the country dropped 0.2 per cent in January from a month earlier, as compared with a decline of 0.3 per cent in December and a drop of 0.2 per cent in both November and October, according to a Reuters weighted home price index based on official data released today.
Prices fell in January, month-on-month, in 47 of the 70 cities monitored by the National Bureau of Statistics, and remained unchanged in the rest. Wenzhou , a highly speculative market which was recently hit by a private financing crisis, recorded the sharpest monthly drop among all cities, of 0.6 per cent.
That formed a sharp contrast with January 2011, when new home prices only fell in three of the 70 cities.
The spreading home price falls and mounting inventories forced many developers to slow down their land purchases and construction, denting local governments’ revenues and their ability to pump money into the slowing economy.
Investors are worried that the slowdown in China’s real estate sector could brake the world’s No. 2 economy to a hard landing, if Beijing does not relax policies in a timely manner while the raging European debt crisis hits its export growth.
So far, Beijing seems not too concerned. Instead, it pressed the eastern city of Wuhu to suspend a plan to relax purchase restrictions last week.
“We feel the central government wants to strengthen market expectations for long-term property tightening stance,” Wu Tao, chief executive of Wins Investment, the fund arm of Chinese developer Gemdale, told Reuters on Thursday.
Average new home prices across China rose 0.5 per cent in January from a year earlier, the lowest in the history of the Reuters weighted index, which started in January 2011, when the NBS stopped providing nationwide home price changes.
The central bank said on February 7 that banks must support first-time home buyers, as well as the construction of both affordable and ordinary homes, signalling a fine-tuning of the property policy.
A Reuters poll in early January showed analysts expect China’s home prices to fall 10-20 per cent in 2012. — Reuters
