Property Prices Fall in More Chinese Cities in August

BEIJING, Sept. 18 (Xinhua) -- More cities reported lower or unchanged property prices in August amid cumulative government efforts to cool the market, according to the National Bureau of Statistics (NBS).

In August, some 46 cities out of the statistical pool of 70 major cities saw new home prices decline or remain unchanged from a month earlier, compared with 31 cities in July, the NBS said in a report.

Sixteen cities saw month-on-month declines in new home prices in August, up from 14 in July. Meanwhile, prices in 30 cities remained unchanged, according to the NBS.

Southwestern Chongqing Municipality and the eastern coastal city of Jinan led the declines. Trading volumes in first-tier cities shrank significantly with prices in cities like Beijing and Shanghai unchanged.

As for resold housing units, 26 cities reported second-hand home price declines month-on-month in August. Second-hand home prices stayed unchanged in 17 major cities in August from July, according to the NBS.

"The data shows the government's measures to cool the property market have taken effect," said Zhang Dawei, an analyst with Centraline Property, a Beijing-based real estate agency.

In the latest effort to curb property prices, the State Council, China's Cabinet, required local governments to establish new home price control targets based on economic growth and increases in disposable income.

The Beijing municipal government has vowed to keep prices of new homes, mainly apartments smaller than 90 square meters, steady or declining this year, according to a statement posted on its website.

In the three-day holiday of Mid-autumn Festival from Sept. 10 to 12, Beijing has seen only 407 contracts completed for residential apartments -- that's a 70-percent drop compared to the three-day holiday in May, and a 50-percent decline from the corresponding period last year, according to the city government's data.

Traditionally in Beijing, September has been known as golden for its booming real estate sales.

Before the cabinet's move, the central government had started to prepare home purchase restrictions in the country's second and third-tier cities to prevent prices from further increases.

As one market-cooling measure, the government previously restricted residents in 43 major cities from buying second or third homes, resulting in a decline in property transaction volume in many of these cities. Home buyers were also required higher down payments for mortgages, and property taxes have been levied in the cities of Chongqing and Shanghai.

"People are looking to further declines amid the stubbornly high inflation," Zhang said.

A recent survey by the country's central bank revealed that more than three fourths of respondents, the largest proportion since the survey began in 2009, said current property prices were "too high." About 38 percent of them expected property prices to continue rising.

To curb soaring inflation, the People's Bank of China, the country's central bank, has raised the benchmark interest rate three times this year and increased the reserve requirement ratio six times.

"Property developers in the country are experiencing a significant slip in fund-raising this year compared to previous years," said China Vanke Co., the country's largest property developer by market value, in a statement.

Nevertheless, developers have continued to invest in the real estate market, secured by the handsome profits they have raked in from previous sales.

During the first eight months, investment in the nation's property sector rose 33.2 percent year-on-year to 3.78 trillion yuan, of which 2.71 trillion yuan went to residential housing, an increase of 36.4 percent over the same period last year, according to earlier NBS data.

To curb the market, the government has announced that it will build 36 million affordable housing units between 2011 and 2015.

Construction on more than 5 million of the units had already started as of June. The government expects the construction of nearly 4 million units will be completed within the year, according to a statement issued by the State Council in July.

"The country needs a medium and long-term plan for the property sector as it would help combine short-term controlling policies with the nation's long-range development blueprint," said Zhu Zhongyi, vice secretary-general of the China Real Estate Association.