China Housing Prices Continue to Fall

Tuesday, July 1st, 2014
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Housing prices in major Chinese cities have fallen for a second consecutive month in June, an independent survey shows, providing more evidence of a deflating property bubble.

The average price of a new home in 100 major cities was 10,923 yuan ($A1,920) per square metre this month, down 0.50 per cent from May, the China Index Academy (CIA) said in a regular monthly survey.

Prices had dropped 0.32 per cent month-on-month in May, the first such decline in nearly two years, but the academy said the pace of the fall accelerated in June.

Prices fell in 71 cities and rose in just 29, it said.

China has long sought to contain rising property prices, while also promising to increase the supply of affordable housing, as surging costs stoke discontent among ordinary citizens unable to afford new homes.

Market control measures have included restrictions on purchases of second and third homes, higher minimum down-payments and taxes in some cities on multiple and non-locally owned homes.

At the same time, local governments, which make much of their income from land sales to developers, have sought to find ways to loosen restrictions when property prices have fallen.

Last week, the city of Hohhot in the northern region of Inner Mongolia appeared to drop limits on the purchase of second homes by saying it would not require information on buyers’ previous transactions, but quickly scrapped the change after media reports.

Hohhot’s home prices rose 0.86 per cent in June from a month earlier to an average 7,064 yuan ($A1,210) per square metre, making it one of the top 10 performers among 100 cities, according to the survey.

On a year-on-year basis, prices in the surveyed cities rose 6.48 per cent in June, 1.36 percentage points less than the annual rise in May and the sixth month of shrinking annual increases, it added.

Of China’s 10 biggest cities, only commercial hub Shanghai recorded a month-on-month increase in July with the average price rising 0.25 per cent to 32,469 yuan ($A5,561) per square metre, it said.

Capital Beijing fell 0.61 per cent to 33,269 yuan ($A5,698) per square metre in June, but remained the most expensive city, the survey showed.

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