Home prices maintain declining in China

Potential homebuyers visit a housing expo in Zhengzhou, Henan province. New home prices in 69 of a sample of 70 major cities showed month-on-month drops in October, the National Bureau of Statistics (NBS) said in a statement. [GENG GUOQING / FOR CHINA DAILY]

BEIJING - Home prices in most Chinese cities continued to drop in October despite easing restrictions, official data showed on Tuesday.

New house prices in 69 of a sample 70 major cities showed month-on-month drops in October, the National Bureau of Statistics (NBS) said in a statement.

Only Zhengzhou bucked the trend, with prices remaining flat from the previous month.

This latest data marks the sixth consecutive monthly drop in the residential property market.

New house prices in Beijing and Shanghai dropped by 1.3 percent and 0.7 percent respectively. For existing residences, 64 of the 70 cities saw price drops last month, with northeastern city of Mudanjiang registering the sharpest fall of 1.8 percent.

On an annual basis, house prices in 67 out of the 70 cities were lower from a year ago.

"The pace of decline was eased following mortgage policy adjustments and efforts to cut housing inventories," said Liu Jianwei, a senior statistician at the NBS.

"New measures are expected to push sales of inventories in case of a further price slump," said the director of the China Institute for Reform and Development's Economic Research Center, Kuang Xianming.

Tuesday's data was released after other statistics showed slower growth in real estate investment and property sales.

The NBS said property investment continued to cool in the first 10 months, growing 12.4 percent year on year, down 0.1 percentage points from the first nine months.

However, property sales showed signs of improvement, indicating efforts to boost the sector may have started to have an effect. Property sales fell 7.8 percent in terms of floor space, easing from a 8.6-percent drop in the Jan.-Sept. period, the NBS said.

The continuing downturn in the property market dragged down growth in the broader economy, which slowed to 7.3 percent in the third quarter.

To avoid a sharp slowdown in the property market, China on Sept. 30 unveiled eased mortgage measures for home buyers in a joint announcement by the People's Bank of China, the central bank, and the China Banking Regulatory Commission.

According to the announcement, mortgages on second homes will be treated as a first mortgage if the buyer has no outstanding mortgages.

Before the easing of mortgage rules, 41 out of the 46 cities that had home purchase restrictions removed them.

Chief analyst at real estate agent Centaline Property, Zhang Dawei, said the price decline resulted in losses for home buyers, especially those purchased houses in 2013.

"The Chinese property market has bid farewell to the past golden decade," he said. "Home prices are unlikely to rebound due to huge inventories and new projects."

He expected this round of adjustments to last until early 2015, while November and December may see slower declines.