Economy

Property price growth slows in major cities

By Yang Ning (China Daily)
Updated: 2010-09-11 11:24

BEIJING - Housing prices in China rose at the slowest pace in eight months from a year earlier in August, while the prices on a monthly basis remained unchanged from July, indicating that buyers and sellers are still cautious, industry analysts said.

Customers at a recent real estate fair in Zhengzhou, Henan province. [China Daily]

Property prices in the nation's 70 major cities grew by 9.3 percent in August, the National Bureau of Statistics (NBS) said on Friday.

That marks a fall from the 10.3 percent growth in July, the slowest pace so far this year.

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However, the month-on-month figures for property prices remained unchanged for two months after witnessing a 0.1 percent decline in June, the first decrease in 16 months.

New home prices rose 11.7 percent in August compared with 12.9 percent in July this year.

"The figures show that the nation's real estate market is still stagnant. Developers and consumers are cautious as they are not sure of the future trend," said Zhou Jingtong, a senior economist with Bank of China.

"The downtrend in prices will continue for some time due to the government's tightening policies," he said.

Property developers raised 4.44 trillion yuan ($653 billion) of funds from January to August this year. Nearly 1.66 trillion yuan was raised by the companies themselves, while 846 billion yuan came from bank loans and 574.5 billion yuan from individual mortgages, said the NBS.

"The financing pressures for developers indicates that the downtrend in the market may continue for some time," said Zhou.

Dong Xian'an, chief macroeconomist at Industrial Securities, said there is very little chance of housing prices recovering in the short-term.

"Housing prices may drop in the fourth quarter of this year and the beginning of next year, as it is slack season for the real estate market," he said.

Since April, the government has launched a series of measures to cool the over-heated property market.

The policies include tightening scrutiny of developers' financing, limited loans for third-home purchases, and higher down-payment requirements for second-home purchases.

Investment in property development rose 34.1 percent year-on-year to 449 billion yuan in August, compared with 33 percent for July and 36.7 percent gain for the first eight months, according to the NBS.