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June 1, 2014

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Home » Business » Real Estate

House prices in key cities see 1st fall in 2 years

HOME prices in major Chinese cities posted their first monthly decline in nearly two years in May, an independent survey said yesterday, providing new evidence that the once red-hot market is losing steam.

The average price of a new home in 100 major cities fell 0.3 percent from April to 10,978 yuan (US$1,760) per square meter, the first fall since June 2012, according to the China Index Academy, the research unit of real estate website operator Soufun.

Prices dropped in 62 cities and were unchanged in one, the survey said.

The biggest dip was in Shantou, south China’s Guangdong Province, where prices slumped 3.6 percent from April.

“Rising supply and sharp falls in transactions have put heavy pressure on property developers’ sales, leading some to beef up promotions and adjust their pricing strategy,” CIA said.

Year on year, new home costs rose 7.8 percent in May, down from 9 percent in April and slowing for the fifth straight month, it said.

In 31 cities, prices fell on an annual basis, with those in Wenzhou — a center of private enterprise and lending in east China’s Zhejiang Province — dropping most of all, at 8.3 percent.

The survey added to signs that China’s property market is cooling, with analysts pointing to factors including stringent bank loan criteria, expectations of falling prices and financial trouble among developers.

Beijing has sought for more than three years to contain rising property values, while promising to add to the supply of affordable housing, as price increases stoke discontent among ordinary people unable to afford new homes.

Market control measures have included restrictions on purchases of second and third homes, higher minimum downpayments, and taxes in some cities on multiple and non-locally owned homes.

However, local authorities make much of their income from land sales to developers, and have often rushed to loosen limits on purchases when property prices have fallen.

Among China’s 10 largest cities, Nanjing saw the biggest fall in May, with prices dropping almost 1.4 percent month on month.

Only two cities — Beijing and Tianjin — saw new home prices increase, with the average cost in the capital rising 0.7 percent from April to 33,472 yuan per square meter.

That was up 22.4 percent from a year ago, narrowing from a 23.9 percent increase the previous month, CIA said.

In Shanghai, the average cost of a new home in May fell 0.4 percent from April to 32,388 yuan per square meter. Year on year, the price rose 14.6 percent, compared with a 15.3 percent gain in April, it said.




 

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