Recent moves by more than 30 cities across China to revoke home purchase restrictions may have slowed the decline in the country’s housing market, but were unable to prevent a fourth month of sliding home prices. According to two independent surveys released on Sunday, the average housing price in China declined in August for the fourth straight month, although at a slightly slower rate than in July.
CREIS Sees 0.6 Percent Fall in Prices
A report published by the China Real Estate Index System (CREIS) found that average home prices declined by 0.6 percent across China last month, slowing from the 0.8 percent drop it reported in July. The August rate was still higher than May or June, however, when the real estate information provider estimated price declines of 0.3 percent and 0.5 percent respectively.
In its survey of 100 cities across China, the unit of real estate agency E-House found that 74 cities suffered price drops, a moderation from the 76 cities recorded in July. Compared to August last year, prices were up by 3.15 percent, however, this was the weakest year on year increase the company had reported since February 2013, when average prices climbed 2.5 percent on an annual basis.
China Index Academy Reports a 0.59 Percent Price Drop
Figures published the same day by rival information provider China Index Academy found a similar trend with average prices falling 0.59 percent across the cities surveyed. For the Academy this was also a slight moderation of the rate of decline compared to July, when prices fell by 0.81 percent in the company’s survey.
The unit of real estate website Soufun now estimates the average cost for one square metre of housing across the 100 cities it surveys to be RMB 10,771 ($1,752). On an annual basis prices rose 3.15 percent in August according to the Academy, a drop of 1.57 points compared to the year on year increase that the company reported in July.
As was the case last month, even China’s largest cities were not immune from the housing slump, with the 10 biggest urban areas all posting month on month slides. In Beijing, which traditionally has had one of the country’s strongest housing markets, prices dropped 0.05 percent to RMB 32,719 ($5,322) per square metre.
Impact of Policy Changes and Discounts Still Limited
The moderation in the rate of price decline may at least in part be the result of a storm of policy changes across many cities in China during the last two months, as well as more determined marketing by real estate companies.
“Property developers stepped up sales promotions and some cities scrapped purchase restrictions to stimulate demand, thus transactions rebounded in the short-term,” the Index Academy said in its report.
During the last two months more than twenty cities have partially or fully rolled back home purchase restrictions put in place earlier to cool down the then overheated market. However, even with these policies reversed, buyers do not yet seem convinced that prices will rebound.
Late last month UBS economist Wang Tao declared that there was little that the government could do at this point. “There’s just simply too much supply, and investors who buy property for investment purposes are not going to be swayed so easily by cutting mortgage rates and downpayment requirements,” Wang said.
With many developers declaring in their mid-year earnings report that they will bring more projects to market in the second half of 2014, these wait-and-see buyers may be rewarded with more decreases in prices.