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China January Home Prices Post Worst Performance in a Year

Buildings stand in the Lucheng District of Wenzhou, Zhejiang Province, China. The eastern city of Wenzhou posted the biggest drop for the third month, with home prices declining by 0.6 percent in January, according to the Statistics Bureau. Photographer: Qilai Shen/Bloomberg
Buildings stand in the Lucheng District of Wenzhou, Zhejiang Province, China. The eastern city of Wenzhou posted the biggest drop for the third month, with home prices declining by 0.6 percent in January, according to the Statistics Bureau. Photographer: Qilai Shen/Bloomberg

Feb. 18 (Bloomberg) -- China’s January home prices recorded their worst performance in at least a year, with none of the 70 cities monitored by the government posting gains as Premier Wen Jiabao reiterated his determination to maintain property curbs.

Prices in 47 of the cities fell, while home values in the remaining 23 were unchanged from December, the National Statistics Bureau said in a statement on its website today. New home prices in the nation’s four major cities of Shanghai, Beijing, Shenzhen and Guangzhou declined for a fourth month.

The data reflects a two-year effort by China to battle rising home prices with measures ranging from higher down payments, mortgage rates to home purchase restrictions in 40 cities. None of the cities posted gains in home prices for the first time since the government began releasing at the start of 2011 prices for 70 cities surveyed instead of a national average.

“The falling downtrend of home prices will strengthen in coming months as the government tightening continues,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “The figures won’t prompt the central government to release the curbs any time soon, because it probably would like to observe and study the market further.”

China won’t waver on its real-estate controls and efforts to bring home prices down to a reasonable level to ensure fairness and stability, Premier Wen Jiabao said during a meeting with business executives on Feb. 12.

Wenzhou’s Falling Prices

The eastern city of Wenzhou posted the biggest drop for the third month, with home prices declining by 0.6 percent in January, according to the Statistics Bureau. A credit squeeze on smaller businesses in the city prompted a visit and pledge of financial aid from Wen in October.

New home prices in Beijing and Shanghai declined 0.1 percent, the data showed. Housing values in Shenzhen slid 0.2 percent and dropped 0.3 percent in Guangzhou.

Today’s figures came after private data also showed signs of cooling. China’s average home prices fell for a fifth month in December, according to SouFun Holdings Ltd., the country’s biggest real estate website.

Home sales in China’s four key cities declined during the week-long Lunar New Year holiday at the end of January. Transactions in Beijing, Shanghai, Guangzhou and Shenzhen fell 66 percent to 109 units, compared with the same holiday period a year earlier, Centaline Property Agency Ltd., China’s biggest real-estate brokerage, said Jan. 30.

Falling home prices fueled an attempt by China’s smaller cities’ to release tightening on property policies. The eastern city of Wuhu was the first Chinese city this year to ease measures ordered by the central government by waiving a deed tax and subsidizing some home purchases. The move was suspended three days later, following the outcome of a similar attempt in October by Foshan in southern China.

China’s property policies are likely to “phase out” this year as it will hurt real estate investment and local governments’ economic growth, Liu Li-gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd., said ahead of today’s release.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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