A survey by E-House China showed home prices declining on a month-to-month basis for the first time since 2012, as the nation’s real estate market continues to slump due to credit concerns.
The report by CRIC, the information unit of E-House, tracked average home prices in 288 cities and found a decline of 0.02 percent in April compared to March. The study showed that prices were still up 6.9 percent compared to the same period in 2013, although the rate of annual increase in prices continued to slacken, after rising 8.1 percent in March.
A competing survey by Soufun’s China Index Academy which surveyed China’s 100 largest cities, found that average prices rose 0.1 percent in April compared to March, although this pace of increase also showed a decline from the 0.4 percent rate reported in March.
The Index Academy’s findings showed average prices rising 9.1 percent on an annual basis in April, falling from a 10 percent rate of increase in March. The Academy also indicated that prices had fallen in 45 of the 100 cities surveyed, compared to only 37 in March.
Shenzhen First Top-Tier City with Falling Prices
While China’s top tier cities have previously seemed immune to price cuts, both surveys showed Shenzhen suffered a month-on-month decline in housing prices in April.
The other three first-tier cities still recorded price increases, although some developers in both Shanghai and Beijing have already begun offering discounts.
Credit Crunch Hurting Sales
The slowdown in real estate prices this year is generally linked to cutbacks in available credit after a surge in buying activity last year.
Commenting on the downturn in China’s property market Credit Suisse analyst Jinsong Du recently said, “Tight credit, with less money flowing in the market, is the main reason for the weakening sales.”
Records from the People’s Bank of China show that new credit in China fell 19 percent in March compared to a year earlier, and money supply grew at the slowest pace on record.
The country’s government has been relying on a tightening of credit to cool down the housing market, and many Chinese banks have eliminated mortgage discounts for first time buyers and begun applying more stringent rules to issuing of home loans in general.