Bloomberg News

China Home Prices Fell for 5th Month in January, SouFun Says

February 01, 2012

(Updates with closing prices in sixth paragraph.)

Feb. 1 (Bloomberg) -- China’s home prices fell for a fifth month in January as the government continued to control the property market, the longest losing streak since SouFun Holdings Ltd. started tracking the data.

Home prices dropped 0.18 percent last month from December, according to SouFun, the nation’s biggest real-estate website owner that began compiling the figures in July 2010. Residential prices slid in 60 of 100 cities tracked by the company, same as in December, it said in an e-mailed statement today.

Premier Wen Jiabao yesterday reiterated that the government will maintain curbs on the property market to bring prices down to a reasonable level. The capital Beijing and the financial center of Shanghai are among Chinese cities that have said they will continue to impose home purchase restrictions this year.

“Home prices are really falling and will drop further as the government curbs remain in place,” Nicole Wong, a Hong Kong-based property analyst at CLSA Asia-Pacific Markets, said in a phone interview today. “The stance of the policies has softened, but we can’t see a firm timeframe for the government to relax the current policies.”

Average home prices nationwide climbed 1.7 percent in January from the same time in 2011 to 8,793 yuan ($1,394) a square meter (10.76 square feet), the slowest pace of growth since August, SouFun said.

A gauge tracking property shares on the Shanghai Composite Index fell 1.4 percent at the close, the most among the five industry groups on the benchmark measure. China Vanke Co., the nation’s biggest listed real estate developer, dropped 1.2 percent, while Poly Real Estate Group Co. lost 1.8 percent.

Holiday Caution

The government also signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirements that some economists had predicted would come before the week-long holiday. Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said last month that ratios were likely to fall ahead of the festival, which boosts demand for cash. The central bank instead used reverse- repurchase contracts to add money to the financial system.

Some banks in Shanghai lowered their mortgage rates to the benchmark rate for first-home buyers, China Business News reported yesterday, citing people it didn’t identify. Some banks’ mortgage rates for first-home buyers were 10 percent above the benchmark in the second half of 2011 partly because of cash shortages, according to the newspaper.

Shanghai, Beijing

Home sales in China’s four-biggest cities declined during the week-long Lunar New Year holiday last week. Transactions in Beijing, Shanghai, Guangzhou and Shenzhen fell 66 percent to 109 units compared with the holiday period a year earlier, Centaline Property Agency Ltd., China’s biggest real-estate brokerage, said Jan. 30.

The central Chinese city of Luoyang and the northern city of Ordos had the biggest month-on-month decline in January, falling 2.6 percent and 2.3 percent, respectively, according to SouFun. The eastern city of Taizhou had the largest gain, up 1.5 percent.

“China’s property policies are unlikely to be reversed this year, but the implementation will possibly be less strict if the sector deteriorates further,” said Gao Ting, chief China strategist at UBS AG, in an interview in Bloomberg’s Shanghai office yesterday ahead of the SouFun data.

China’s outstanding property loan growth slowed last year by 13.5 percentage points from 2010, the central bank said Jan. 30.

Margins of developers will be under pressure this year and home prices may be little changed at the end of the year after falling 5 percent in the first three quarters, said CLSA’s Wong.

--Bonnie Cao. Editors: Andreea Papuc, Linus Chua

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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