A residential community in Jilin, Northeast China's Jilin Province. Photo: CFP
10 cities with biggest price drop in May
More Chinese cities reported a month-on-month decline in new home prices in May, official data showed Wednesday, indicating a turning point in the once red-hot property market.
Home prices in 35 out of 70 Chinese cities monitored by the National Bureau of Statistics (NBS) witnessed a monthly drop in May, up from 8 cities in April, while only 15 cities saw a monthly rise in prices last month, down from 44 cities in April, the bureau said in a statement.
Homebuyers have started to take a wait-and-see attitude amid uncertain market prospects, prompting developers to cut prices to alleviate pressure from high inventories, said Liu Jianwei, senior statistician with the NBS.
Another reason is pressure from the capital market, which is forcing developers to cut prices in a bid to boost sales and deliver better half-year financial reports, Zhang Dawei, research director at real estate broker Centaline Property, told the Global Times Wednesday.
Average home prices in the 70 major cities fell by 0.15 percent month-on-month in May, compared to a 0.06 percent increase in April. It marked the first month-on-month decline in 23 months, according to China Everbright Securities Co.
This is the first official sign of a turning point in China's housing market. Earlier this month, a survey by private property research firm China Index Academy also showed that the average home price in 100 major Chinese cities recorded a month-on-month decline in May, marking a cool-down after nearly two years of consistent rise.
The deteriorating data on home sales and investment in real estate development will pose challenges to the central government's determination to stabilize growth, so further policy easing in the property sector is highly possible, Everbright Securities said in a research note sent to the Global Times Wednesday.
In real practice, authorities are likely to increase lending to the real estate sector, support the construction of affordable housing through "targeted monetary easing", as well as relax limits on housing purchases and implement differential mortgage policies to homebuyers, it said.
Of all the 70 cities, Hangzhou, capital of East China's Zhejiang Province, saw the biggest month-on-month drop of 1.4 percent in home prices.
Top-tier cities Shanghai and Shenzhen experienced the slide for the first time, reporting 0.3 percent and 0.2 percent drops respectively in May, NBS data showed.
In a separate survey by private property consultancy E-House Real Estate Institute, home prices in Shanghai and Shenzhen rose by 6.6 percent and 1.5 percent on a month-on-month basis in May.
The average new home price in four top-tier cities - also including Beijing and Guangzhou - rose by 3.7 percent month-on-month and 10.6 percent year-on-year in May.
"The gap in figures is mainly due to different methodology adopted by the NBS and our consultancy," Yan Yuejin, a researcher with E-House Real Estate Institute, told the Global Times Wednesday. "Our data indicate that more high-end apartments were sold in Shanghai last month and drove up the average home price."
However, on a year-on-year basis, 69 out of the 70 cities tracked by the NBS saw prices rise though at slower rates in May, with Wenzhou being the only city which saw a decline.
Among 46 domestic cities that implemented restrictions on home purchase, local authorities in four cities - Nanning, Wenzhou, Haikou and Wuxi - have eased such restrictions so far.
Shenyang, capital of Northeast China's Liaoning Province, was rumored to have relaxed home purchase restrictions on June 10, but the local housing authority quickly denied the rumor one day later.
Around 40 second- and third-tier cities are likely to lift some curbs on home purchases by the end of this year, and home purchase restrictions will be completely overturned by 2015, Zhang Hongwei, research director of property consultancy ToSpur, predicted in a research note sent to the Global Times Wednesday.
