China’s February home prices posted the biggest decline in 19 months as the government pledged to maintain curbs on property, according to SouFun Holdings Ltd, the nation’s biggest real-estate website owner.
Home prices dropped 0.3 per cent last month from January, according to SouFun, which began compiling the figures in July 2010 when housing values fell 1.3 per cent. Residential prices slid in 72 of 100 cities tracked by the company last month, 12 more than in January, it said in an e-mailed statement Thursday.
Shanghai restated home purchase restrictions on local permanent residents buying second homes on February 28, a week after a newspaper affiliated with state-run Xinhua news agency said China’s financial centre had broadened its definition. Premier Wen Jiabao has maintained that he will not waver on real estate controls and efforts to bring prices down to a reasonable level.
“Home prices will continue to fall in the coming months because it’s pretty clear that the central government won’t ease the tightening soon,” said Zhao Zhenyi, a Shanghai-based property analyst at Yuanta Securities Co. “Developers will launch more projects as inventories increase.”
Local governments have attempted to ease property tightening policies with little success. The eastern Chinese city of Wuhu on February 13 reversed its decision to relax property curbs. The mid-sized city in Anhui province had planned to waive a deed tax and subsidise some purchases on February 9, becoming the first Chinese city this year to signal its intention to ease property measures.
Average home prices nationwide climbed 0.93 per cent in February from the same time in 2011 to RMB8,767 (US$1,391) a square metre, the slowest pace of growth since August, SouFun said. The month-on-month decline in February was the sixth straight drop, the longest losing streak since SouFun started tracking the data.
Shanghai’s February new home prices dropped 12 per cent from the previous month, according to property consultant Shanghai UWin Real Estate Information Services Co.
Chinese property developers fell in Hong Kong trading and made up eight of the 10 biggest decliners on the MSCI China Index at the close. China Overseas Land & Investment Ltd, the nation’s biggest developer listed in Hong Kong, declined 5.5 per cent to HK$15.36, the most since December 6.
Some Chinese developers are allowing first-time home buyers to delay their down payments to boost sales, China Business News reported on February 27, citing unidentified sales agents.
Developers in cities including Nanjing, Shenzhen, Guangzhou and Wuhan sold some projects with a 10-per cent down payment, the newspaper reported. The sellers advanced the remaining 20 per cent, which buyers do not have to pay back for as long as three years in some cases, the newspaper said, citing agents and sales people it did not identify. First-home buyers in China need a minimum 30-per cent down payment.
Home prices in the western city of Chengdu fell 1.1 per cent from January, the biggest decline among China’s 10 biggest cities, while Beijing dropped 0.6 per cent, according to SouFun.
The property market will remain challenging this year, though there would not be a “collapse” as leading cities prove more resilient, according to a Citigroup Inc report Thursday, led by analyst Oscar Choi.