China home prices at year’s low
Property sector slowing further on government curbs
SHANGHAI: China’s February home prices posted the worst performance in a year with almost half of the cities monitored by the government falling from a year ago as the country maintained curbs on the property market.
New home prices fell in 27 of 70 cities last month from a year earlier and prices were unchanged in six cities, the national statistics bureau said in a statement on its website yesterday. That is the worst since the government began at the start of 2011 releasing individual data for 70 cities instead of a national average.
Premier Wen Jiabao said last week housing prices remained far from a reasonable level and called on the government not to slacken efforts to regulate the home sector. Relaxing the curbs could cause “chaos” in the market, Wen said. China’s two-year campaign to rein in home prices has included measures such as higher down payments and mortgage rates, and home purchase restrictions in 40 cities.
“China’s home prices fell further, but it doesn’t mean there will be a policy loosening any time soon,” said Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc. “The government is not worried too much about the impact of a slowing property market on economic growth because investment in social housing will still be big.”
Home prices will need to see a “meaningful correction” by falling 20% to 30% from last year’s peak before the government relaxes policies on property, Qu said.
A gauge of property stocks on the Shanghai Composite Index fell 1.2%, the most among five industry groups on the benchmark.
The eastern city of Wenzhou posted the biggest drop for the fourth month, with home prices declining 0.5% from January and 8% from a year earlier, according to National Statistics Bureau data. A credit squeeze on smaller businesses in the city prompted Wen to visit in October and pledge financial aid.
“We’re still not sure when is the bottom but we’re sure that we’re still heading for the bottom rather than hitting the bottom,” said Bei Fu, a Hong Kong-based analyst at Standard & Poor’s. “Liquidity is the highest risk Chinese developers are facing.”
Prices have gone up “very substantially” over the past few years and the central government is very determined to control prices to maintain social stability, said Fu.
“As long as the current stringent methods are being continued, rather than introducing any new methods, it’s going to be quite severe for the sector to rebound anytime soon,” she said.
Among major cities, home prices in both Beijing and the financial center of Shanghai fell 0.4% last month from a year ago. In the south, Shenzhen declined 0.2%, while Guangzhou rose by 0.3% from 2011.