Monday, March 19, 2012

China's home prices at lowest level since 2011

Mar 19, 2012 -
Home prices in China recorded their worst performance in a year, with nearly half the cities tracked by the National Statistics Bureau witnessing a drop in prices from 2011, as the government maintained curbs on the property sector.

The National Statistics Bureau revealed that prices of new homes dropped in 27 out of 70 cities in February from a year ago, while prices remained unchanged in six cities, marking the worst performance since the government started providing individual data for 70 cities last year.

According to Premier Wen Jiabao, housing prices are still far from a reasonable level. He urged the government not to relax its efforts in regulating the home sector, as “chaos” in the market may otherwise ensue.

The government’s two-year campaign to restrain home prices has included measures such as higher mortgage rates and down payments, as well as home purchase restrictions in 40 cities.

“China’s home prices fell further, but it doesn’t mean there will be a policy loosening any time soon,” said Qu Hongbin, a Hong Kong-based economist at HSBC Holdings Plc.

“The government is not worried too much about the impact of a slowing property market on economic growth because investment in social housing will still be big.”

For the government to relax its policies on property, home prices must first have a “meaningful correction”, said Qu, implying a decline of 20 to 30 percent from the previous year’s peak.

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Source From Property Guru

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