China’s slide in home prices continued in June, according to two privately conducted surveys, with nearly three-quarters of the country’s largest cities covered in one study reporting drops in average housing costs compared to May.
According to data from China Real Estate Index System (CREIS), a division of property website Soufun, pricing for new homes declined an average of 0.5 percent nationwide during June, compared to the previous month. Of the 100 cities polled by Soufun, 71 of the communities reported falling prices.
A competing survey by property agency E-House China found prices dropping an average of 0.6 percent across 288 cities – the third month in a row of falling prices for the country’s once-booming real estate market.
While prices were still up compared to the same period last year, the year-to-year difference declined in June compared to May with E-House reporting that June’s average rates were 5.3 percent more than the same month in 2013, compared to a 5.8 percent differential reported in the same survey for May.
The CREIS survey indicated that June prices were up 6.48 percent over the same period in 2013, however, this survey also showed a narrowing gap compared to recent months. In May the year to year differential had been 7.8 percent and in April 9.1 percent according to the CREIS poll.
Homes Sales Volumes Down in 40 Chinese Cities
While the drop off in home prices remains relatively modest, the slowdown in transaction volumes has been more pronounced.
According to E-House data, when measured in square metres, sales of new homes in China were off 23 percent during the first six months of 2014, compared to the same period last year. In the 40 biggest cities transactions for new homes totalled only 89.6 million square metres, down from 116.3 million for the first six months of 2013.
However, the transaction volumes for 2014 to date were still 14 percent more than what was sold in the first six months of 2012, and 13 percent more than sales for the January through June of 2011.
Despite the relative mildness of the slowdown, when coupled with a major government clampdown on credit, the downturn has left many developers short of cash. Just during the last two weeks a Hangzhou developer collapsed after running up bills of RMB 2 billion, and a Shanghai development project was halted by the courts after the project owners were unable to pay their bills.