2011-11-24 BEIJING (Xinhua) - Beijing is finally seeing a turning point for sky-high housing prices following the implementation of tightened property market control policies, said property market observers.
With the tightening policies and rises in unsold housing supplies, the property market in China is now experiencing apparent price reductions, Zhang Dawei, an analyst with Centaline Property Agency, said Wednesday.
More Chinese cities posted monthly housing price declines in October. Over 40 cities with purchasing control policies have seen average housing price declines of about 0.21 percent from September to October, said a newly released report conducted by Centaline Property Agency.
Prices of new homes in four of China's major cities -- Beijing, Shanghai, Guangzhou and Shenzhen -- saw overall month-on-month price drops after staying unchanged for three months, with decreases of 0.1 percent in Beijing, 0.3 percent in Shanghai, 0.2 percent in Guangzhou, 0.1 percent in Shenzhen.
"As the country's property market wanes, housing prices in these major cities are now showing the apparent signs of a turning point, echoing the central government's campaign of calming the runaway property market," said Zhang.
In October, 34 cities in a statistical pool of 70 major cities saw declines in new home prices from September, compared with 17 in September, said the National Bureau of Statistics (NBS).
New home prices in 20 cities stayed unchanged last month from September, and growth rates of home prices in the other cities were all below 0.2 percent.
Besides dampening speculation, the purchasing control policy has been tested as an effective measure to delay the release of the housing purchasing demand, said Chen Sheng, vice president of the China Index Academy (CIA).
It also leaves room for various levels of subsidized housing to feed some portions of social need, he added.
Since April 2010, China has imposed a raft of measures aiming to calm property prices. They include higher down payments, limits on the number of houses that people can own, the introduction of a property tax in some cities and the construction of low-income housing.
To gear the property market toward healthy development, China has also begun construction on affordable housing units, aiming to build 36 million subsidized housing units by 2015. China's housing authorities announced in early November that they have already met this year's construction goal.
Nevertheless, the property market control target could hardly be reached overnight with short-term actions. Prices are expected to reach a period of continued decline before finally reaching a reasonable level, said market observers.
The mid-term property market control policies should last at least to the end of 2012. And the strength of this round of control policies should be carried on for three to five years in order to reach the government's target, said Zhang.
China's property market took off after the government started housing market reforms in 1998. But prices seemed to have grown out of control over the past few years, especially in the wake of the 2008 financial crisis, as the government implemented a massive stimulus package and ordered banks to flood the market with credit.
In a move to rein in runaway property prices, China's central government in April started to restrict residents in 43 major cities from buying second or third homes, effectively bringing down property transaction volumes in many cities.