China’s home prices fell at a faster pace last month than the previous month, a survey showed on Monday, as the central bank announced looser credit policies to try to avoid a sharp decline.
The average price of a new home in 100 major cities was 10,627 yuan (US$1,730) per square meter last month, down 0.92 percent from August, the China Index Academy said in a statement.
It was the fifth month-on-month fall in a row, as analysts warn that China’s flagging property sector is contributing to slowing growth in the world’s second-largest economy.
All of China’s 10 biggest cities continued to post month-on-month decreases, with the average price in Beijing dropping 1.34 percent to 32,281 yuan per square meter.
“The market trend is clearly downward” said the academy, the research unit of real estate Web site operator Soufun.
“Potential buyers expect the market to decline, and there is not enough credit to support demand,” it said.
In recent years China has sought to rein in runaway property prices — a source of discontent among ordinary citizens — by introducing market control measures, including buying limits on second and third homes.
However, local governments make much of their income from land sales to developers and have tried to find ways to ease the restrictions as property prices have fallen in recent months.
The survey results came as China’s central bank eased credit policies for the sector, announcing yesterday that people who had paid off previous mortgages would be treated as first-time buyers and enjoy preferential policies.
For first-time buyers, lenders are now allowed to charge a mortgage rate as low as 70 percent of the benchmark lending rate, the People’s Bank of China said in a statement.
“These measures suggest that the government does not want to have a sharp correction in the property sector,” analysts at Nomura said in a note.
“But we doubt that they will end the correction, given the severity of the oversupply problem,” they added.
In June, the city of Hohhot, Inner Mongolia, became the first to drop restrictions on the purchase of second homes, and most other municipalities that had imposed the policy have followed suit.
The central government in July published a draft of long-awaited property registration rules, a move that could reduce scope for speculation and pave the way for nationwide real-estate taxes.
Year-on-year, prices in the surveyed cities rose 1.12 percent last month, 2 percentage points lower than the annual rise in August and the ninth month of shrinking yearly increases, the academy said.