Buyers stay away from housing market

The correction in China's real estate market in July dented people's confidence and their willingness to buy property, a survey released on Wednesday showed.

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 Chinese households' confidence in the economy remained at 126, and their willingness to invest lost 2 points to 112.

People were reluctant to buy homes as the component measuring the sentiment on property purchase was only 96. 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 properties, people are still 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 the China Index Academy, housing prices remained weak for the third consecutive month in July with more than three-fourths of the cities registering month-on-month declines. The average price of new homes in 100 cities fell 0.81 percent from June to 10,835 yuan (US$1,756) each square meter in July, although more than 20 cities have lifted the cap on the number of homes each household is allowed to buy — a move the local governments introduced to fight the slack property sales which was posing a threat to the economy.

China's GDP expanded 7.5 percent from a year earlier in the second quarter.