Bloomberg News

China Home Prices Drop for First Time in a Year, Soufun Says

October 08, 2011

(Updates to add statement details from the fourth paragraph.)

Oct. 8 (Bloomberg) -- China’s home prices fell 0.03 percent from a month earlier in September, the first decline in a year, said Soufun Holdings Ltd., the country’s biggest real estate website owner.

Residential prices rose in 54 of 100 cities tracked by Soufun and fell in 44 cities, with average home values nationwide at 8,877 yuan ($1,396) a square meter, Soufun said in an e-mailed statement today. Compared with the same month last year, average prices rose 6.15 percent, Soufun said.

China’s efforts to control its property market are at a critical stage and the nation needs to focus on curbing price increases in less-affluent cities, Premier Wen Jiabao said on Sept. 1. The government said in July that it will rein in residential prices in smaller cities after it raised down- payment requirements and mortgage rates earlier this year.

Today’s statement showed that price data remain mixed. Among the 10 largest cities, home prices last month dropped 0.23 percent in Shanghai from August and slid 1.39 percent in Chongqing, while Beijing saw a 0.24 percent increase. Compared with September 2010, home costs climbed in all 10 cities.

China’s property market is in a “deadlock” as demand remains strong even after the government limited the number of homes individuals can buy and tried to cap price gains, Lu Zhongyuan, deputy director of the State Council Development Research Center, said at a briefing in Beijing last week. The government will probably maintain property curbs into next year, Lu said.

Housing transactions in Beijing during the first six days of October plunged 62 percent from the same period in September and shrank nearly 10 percent on year, the Beijing Times reported today, citing local government data.

Chinese developers face an “increasingly severe” credit outlook, which may force them to cut prices and turn to costlier sources of funding as sales weaken, Standard & Poor’s said Sept. 27.

“The worst isn’t over for China’s real estate developers,” S&P analysts led by Frank Lu wrote in a report. “Developers are bracing themselves for slower sales and lower property prices ahead.”

--Li Yanping. Editor: Neil Western, Jim McDonald

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net;


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