The average price of new homes in 70 Chinese cities continued to fall in November, signalling the decline in home prices hasn’t run its course.
But on a month-over-month basis, average home prices fell at a slower pace, as some developers started to rein in discounts after Beijing unexpectedly cut interest rates and eased mortgage rules nationwide.
Analysts and investors are looking for signs of stabilisation in China’s real-estate market, which has seen a sharper-than-expected downturn this year.
The correction in the all-important housing market has dragged economic growth in the world’s second-largest economy. Analysts estimate that real estate accounts for nearly one-quarter of gross domestic product when construction, cement, steel, chemicals, furniture and related industries are factored in.
On a month-over-month basis, prices in November slipped 0.6 per cent, compared with a 0.8 per cent fall in October, according to calculations by The Wall Street Journal. It was the third consecutive month that average prices fell less sharply than in the previous month. The National Bureau of Statistics doesn’t break out monthly figures.
On a year-over-year basis, the average price of new homes declined by 3.6 per cent in November, compared with a 2.5 per cent fall in October and 1.1 per cent fall in September which was the first annual decline in nearly two years.
Excluding public housing, private-sector home prices fell in 68 of the 70 cities in November from a year earlier, up from the 67 cities that posted declines in October. On a month-over-month basis, home prices fell in 67 of the 70 cities in November, down from October’s 69.
The central bank cut benchmark interest rates last month, the first broadbased cuts since July 2012. This came on the heels of a relaxation in mortgage policies which have led to improved sentiment among investors and home buyers.
China in late September loosened mortgage restrictions by extending to existing homeowners the preferential rates and terms that first-time buyers enjoy.
But the property data has been mixed so far, indicating that such policy moves have a limited impact in many Chinese cities that are still plagued by huge inventory levels.
Housing sales in November showed a bigger year-over-year decline than they did in October.