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New home prices continue to fall

(Agencies) Updated: 2014-10-25 08:37

New home prices continue to fall

The seafront at Xiamen, Fujian province: The only city where new home prices did not fall in September, remaining unchanged from the previous month. [Provided to China Daily]

Analysts predict chill will continue for rest of the year

New home prices fell in all but one city monitored by the government last month as easing of property curbs failed to halt a market downturn amid tight credit.

Prices dropped in 69 of the 70 cities in September from August, the National Bureau of Statistics said in a statement on Friday, the most since January 2011 when the government changed the way it compiles the data. They fell in 68 cities in August.

The central bank on Sept 30 eased mortgage rules for homebuyers who have paid off existing loans, reversing course after a four-year campaign to contain home prices as Premier Li Keqiang seeks to prevent economic growth from drifting too far below the government's 7.5 percent annual target. Home sales slumped 11 percent in the first nine months of this year.

"Prices will continue the downtrend for the rest of the year," said Donald Yu, Shenzhen-based analyst at Guotai Junan Securities Co.

"If sales in the fourth quarter fail to clear inventories as developers want, more price cuts are still likely in the first quarter of next year."

All but five of the 46 cities that imposed limits on home purchases since 2010 have removed or relaxed such restrictions amid the property downturn that has dented local revenues from land sales.

Developers will keep prices attractive as they open more projects toward the end of the year to meet sales targets, boosting supply and increasing competition, Shenzhen-based Ping An Securities Co's analyst Yang Kan wrote in a report.

New home prices fell 0.7 percent from August in Beijing and 0.9 percent in Shanghai, according to the government. The port city of Xiamen in Fujian province was the only city where prices did not fall, remaining unchanged from the previous month.

Prices in Shanghai fell 0.8 percent from a year earlier, the first annual decline since December 2012, compared with a 17.5 percent jump in January this year. Hangzhou, the capital of Zhejiang province, had the biggest decline among all cities, with 7.6 percent.

The average new home price in 100 cities tracked by SouFun Holdings Ltd fell 0.9 percent in September from August, dropping for the fifth consecutive month. The price rose 1.1 percent from a year earlier, narrowing for a ninth month in a row, China's biggest real estate website owner said.

The People's Bank of China's new rules give homeowners who have paid off their mortgages and want a second property the same advantages as first-time buyers, including a 30 percent minimum down payment, compared with at least 60 percent previously, and interest rate discounts of as much as 30 off the central bank's benchmark. The PBOC also eased a ban on mortgages for people without home loan debt who want to buy a third home, allowing banks to lower downpayments and rates.

Sales in 32 cities tracked by Barclays Plc, meanwhile, rose to the highest level so far in 2014 last week, "with the primary driving force from the combination of accelerating new launches and improving homebuyers' sentiment", the bank's Hong Kong-based property analysts led by Alvin Wong wrote in a report on Monday.

Home sales in September jumped 40 percent from August, the biggest increase this year, according to Bloomberg News calculations, based on a government report earlier this week.

New home prices continue to fall

New home prices continue to fall

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