Household confidence drops as people are reluctant to buy homes

The correction in China's real estate market dented the confidence of Chinese households in July and people's willingness to buy property continued to soften, a survey showed on Wednesday.

The China Wealth Index, compiled by the Bank of Communications and Nielsen every two months, came in at 125 in July. It was lower than 127 in May and 130 in March, though a reading above 100 reflects optimism.

The component indices showed households' confidence in the economy remained at 126, and their willingness to invest shed 2 points to 112.

People continued to be reluctant to buy homes as the component measuring their sentiment on property purchase was only 96. In the previous survey in May, the index stood at 99, below the positive sentiment level for the first time in the survey's four-year history.

"Although some cities have loosened restrictions on the trade of properties, people are cautious," said Lian Ping, chief economist at the Bank of Communications. "The market response so far indicates that people are still adopting a wait-and-see attitude, and we estimate the industry will remain lackluster in the second half."

According to China Index Academy, housing prices in Chin remained weak for the third consecutive month in July with more than three-fourths of the cities registered month-on-month declines.

The average price of new homes in 100 cities fell 0.81 percent from June to 10,835 yuan (US$1,753) per square meter last month.