China's property sector showed new signs of cooling in July, with more cities reporting month-on-month price drops.
Out of 70 major Chinese cities, 64 saw month-on-month price
declines for new homes in July, compared with 55 in June, the
National Bureau of Statistics said in a statement.
Only two cities, Xiamen in southeastern Fujian Province and Dali
in southwestern Yunnan Province, saw month-on-month price gains in
new home prices last month, compared with eight cities in June and 15
cities in May, the NBS data showed.
New home prices in Xiamen edged up slightly by 0.2 percent month
on month while Dali prices rose by 0.1 percent.
Hangzhou, in east China's Zhejiang Province, saw new home prices
drop the most among the 70 cities, down by 2.5 percent from June.
Sanya, on south China's Hainan Island, dropped by 2.4 percent month
For existing homes, 65 major Chinese cities saw price drops in
July, up notably from 52 cities in June, according to the NBS. Prices
of existing homes in Shenyang in northeast's Liaoning Province
decreased the most by 1.5 percent from June.
Only one city, Xining in west China's Qinghai Province, recorded a
month-on-month price gain for existing homes in July, up slightly by
0.1 percent from June, the NBS said. However, on a year-on-year
basis, new home prices in 65 cities are still higher than a year ago,
with only three cities seeing a price drop in July; Hangzhou and
Wenzhou in east China's Zhejiang Province and Shaoguan in central
China's Hunan Province.
The growth rates in the 65 cities moderated significantly in July,
said Liu Jianwei, a senior statistician at the NBS.
Liu said many home buyers were taking a wait-and-see attitude due
to uncertain market prospects, which led to month-on-month drops in
home prices in more Chinese cities.
The latest data added to signs that China's property market is
experiencing an obvious downturn after torrid growth in previous
Earlier NBS data, including investment and sales figures and the
property development climate index, all suggested the sector was
continuing to cool and struggle.
In the first seven months, property sales in China dropped 7.6
percent year on year to 564.8 million square meters. The drop was 1.6
percentage points steeper than the decline seen in the first half of
the year, according to the NBS.
In the second quarter of 2014, new housing starts and sales
contracted for the second successive quarter as property investment
cooled to its slowest pace since the second quarter of 2009.
"Within four months, new home price drops spread from
individual cities, with only four in March and eight in April, to the
record high of 64 cities in July. The pace of cooling in this round
of property adjustments is faster than market expectations,"
said Zhang Dawei, chief analyst at real estate agent Centaline
Zhang said the latest data suggested that the cooling trend was
still evident. Growth of property investment decelerated for six
months straight starting in February.
In July, monthly property sales stood at 81.15 million square
meters, representing a year-on-year decrease of 16.3 percent and a
month-on-month dive of 34 percent.
Zhang said rising inventory suggested that a housing oversupply
has begun to show in some cities, and the removal of purchase
restrictions on multiple homes, mostly in second- and third-tier
cities where inventories are high, is unlikely to have much effect.
Amid sluggish sales, various forms of policy easing were seen in
37 of 46 cities that had previously imposed market control measures
ranging from purchase limits on second homes to higher minimum
down-payments, media reports said.
In Zhang's view, the credit policy and discounted mortgage rates
offered by commercial banks to first-home buyers were meaningful and
their impact on the market must be watched closely.