Shanghai Home Prices Drop in May as China Market Slides

The first report on China’s home market for May was published on Friday and the results show a continued slide in housing prices nationwide, with price decreases spreading even into the country’s megacities such as Shanghai.

The survey by China Index Academy, a unit of Soufun.com, saw average home prices dropping 0.3 percent in May compared to April. The average home price across the 100 cities polled was RMB 10,978 (US$1760) per square metre according to the Academy’s findings.

The report provides further evidence of the slowdown in the nation’s real estate market, after a competing study by E-House China saw price growth turn negative last month for the first time in two years. The Academy’s May report also was the first report of a nationwide drop in prices by the information provider since 2012.

Official figures for April from China’s National Bureau of Statistics indicated that the average price of homes still grew by 0.1 percent across the 70 cities tracked by the government, although the bureau’s report also saw growth decelerating.

Big Cities No Longer Immune

While the popular story has been that prices are dropping in smaller communities but still growing in the first tier cities, even mighty Shanghai saw prices slide in May. According to the Academy’s report, average home prices in the nation’s commercial centre fell by 0.4 percent compare to April to RMB 32,388 per square metre.

Just up the river from Shanghai in Nanjing, prices were down by nearly 1.4 percent in May compared to April. However, Beijing and Tianjin both continued to report price increases compared to the previous month with both cities turning in a 0.7 percent rise in rates during last month.

Among China’s 10 largest cities, Nanjing saw the biggest fall in May, with prices dropping almost 1.4 percent month on month.

Only two cities — Beijing and Tianjin — saw new home prices increase, with the average cost in the capital rising 0.7 percent from April to RMB 33,472 per square meter.

62 Percent of Cities Saw Prices Drop on Annual Basis

Of the 100 cities covered by the Soufun study, 62 reported falling prices, and one city reported that rate remained unchanged. The steepest slide came in the city of Shantou in Guangdong province, where prices fell by 3.6 percent compared to a month earlier.

While average prices still achieved 7.8 percent growth nationwide in May compared to the same month last year, 31 cities reported falling prices. The year-on-year loss leader was Wenzhou, which reported an 8.3 percent fall in housing costs.