Home Prices Fall in 45 of China’s Top 70 Cities

This is no time to find out about gravity

Continuing the downward trend in China’s residential real estate prices, the National Statistics Bureau announced today that the average price paid for residential real estate fell on a month to month basis during February in 45 of the 70 cities surveyed by the bureau. In January, rates had fallen in 47 of the same 70 cities.

For some of China’s largest cities, including Shanghai, Beijing, Shenzhen and Guangzhou, this was the fifth straight month of falling prices.

Property prices remained unchanged in 22 of the cities on the list, while only the northern city of Baotou, the eastern city of Jinan and northwestern city of Xining declared price rises.

The price drops come after a period when the central government has repeatedly stated its determination to rein in the housing market, and several cities which have attempted to reverse real estate restrictions, including Shanghai and Wuhu, have been forced to maintain tight curbs on transactions. As recently as Wednesday, Premier Wen Jiabao declared that residential real estate prices are still “far from a reasonable level.”

Many observers speculate that with the prospect of the government’s restrictions being kept in place until at least after the Communist Party meetings later this year, that many property developers see no choice but to begin cutting prices in order to maintain sales and preserve their cashflow.

The city of Wenzhou in Zhejiang province, which has long been known for its real estate speculators, posted the biggest fall in prices for the fourth month, with residential real estate rates declining by 0.5 percent from January and 8 percent from last year. New home prices in Beijing fell 0.1 percent from January, with a 0.2 percent fall in Shanghai, and both Guangzhou and Shenzhen recording 0.2 percent decreases.