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China's house price declines expected to moderate in Q4

2014-11-02 16:33 Xinhua Web Editor: Qin Dexing

China's housing market will continue on a downward trend in the fourth quarter, but at a slower rate, analysts said.

The average price of a new home in 100 major cities in October fell for the sixth-straight month, reaching 10,629 yuan (1,738 U.S.dollars) per square meter, down 0.4 percent from September, statistics from China Index Academy (CIA) showed Saturday.

Prices in the surveyed cities fell 0.52 percent in October from the same month last year, ending 22 straight year-on-year increases, CIA said.

"Housing price depreciation will continue throughout the year as developers continue to offer price discounts to unload stock faster. But the declines will be moderate due to increased sales and liquidity boosted by preferential credit policies," said CIA chief analyst Du Bingguo.

China's property sector, once regarded as a key growth engine for the world's second largest economy, has seen falling prices and sluggish sales since the beginning of 2014 .

Property dropped by 8.9 percent year on year during the Jan.-Sept. period, with residential property slumping 10.8 percent, data from the National Bureau of Statistics (NBS) showed.

To avoid a sharp slowdown in the property market, an easing of mortgage rules was announced on Sept. 30 to expand the pool of potential home buyers and the amount they can borrow.

According to the rules, mortgages on second homes will be treated as a first mortgage if the buyer has no other outstanding mortgages.

Data from the CIA revealed that, from Oct. 19-25, residential property sales in most of the 21 monitored first- and second-tier cities rose, with sales growth in Beijing and Shenzhen hitting 17.78 percent and 36.13 percent, respectively, compared with last month.

In the second-hand housing market, fallout from the eased mortgage measures was even more obvious. Statistics from Homelink, China's largest chain real estate broker, showed that transactions in Beijing from Oct.1-26 had doubled compared with last month.

"These policies helped market sentiment and sales, and will continue to have a positive impact on the property market in the fourth quarter, but it is not likely that the transactions will surpass the same period last year due to excessive inventory," Du added.

The housing inventory in 35 Chinese cities hit a 5-year high of 280.13 million square meters by the end of September, up 23.8 percent year on year, according to data released by property consultancy E-House China.

A series of measures announced by Premier Li Keqiang after an executive meeting of the State Council last week, to boost and upgrade domestic consumption, were also considered by experts as signals of property-market stabilization.

The premier highlighted major areas that offered the potential to boost consumption, including the stabilization of housing consumption and relaxing terms for withdrawing housing provident funds to pay rent.

Zhang Dawei, chief analyst at real estate agent Centaline Property, believed that the effect of these measures will help ease the pace of home price depreciation in the fourth quarter.

"This round of property readjustment will last until at least early 2015, and the effectiveness depends on the scope and implementation of these policies," said Zhang.

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