China’s home prices fell in a record 37 of 70 cities tracked by the government in March as officials pledged to keep restrictions on property purchases that have sapped buyer demand.
The eastern city of Wenzhou led declines with a 9 percent slump in values from a year earlier, while Beijing and Shanghai recorded drops of 0.8 percent, according to data released by the statistics bureau today.
Today’s release underscores forecasts for China’s economic growth to slow further this quarter after the rate reached the lowest level in almost three years in the three months through March. Momentum in the real-estate industry is “too strong to reverse” for now, according to Li Daokui, a former adviser to the nation’s central bank.
“Alternative drivers of GDP growth will have to take some time to come in, to fill in the vacuum,” Li said today in an interview with Bloomberg Television from Sydney, citing water, rail and public-housing projects as future contributors to the expansion. Policy makers are aiming to balance reining in property speculation without hobbling growth, he said.
The benchmark Shanghai Composite Index rose 2 percent, part of a rally across Asia after the International Monetary Fund boosted global economic estimates and Spain sold more debt than targeted.
China’s growth will slowly accelerate in the second half of 2012 after marking a “lower point” this quarter, according to comments by Zhu Baoliang, chief economist at the State Information Center’s forecast department at a Beijing seminar today that were posted on a website controlled by the State Council Information Office.
China’s State Council, or Cabinet, last week pledged to stick with existing property controls. The government has toughened requirements for down-payments and mortgages, and imposed restrictions on the number of homes each family is allowed to buy.
The drop in March home prices compares with 27 cities that registered a decrease in February, according to data today from the nation’s statistics bureau. The bureau switched from a national average to individual figures for the 70 cities at the start of last year.
“The falling trend in prices reflects government policies, and these are unlikely to change this year, which is discouraging buyers,” Dariusz Kowalczyk, a Hong Kong-based strategist with Credit Agricole CIB, said in an e-mail. “The housing market is the main risk to China’s soft landing, one that we think will be controlled by the government but also one that needs to be closely watched.”
Wenzhou posted the biggest drop for the fifth month, according to the data. A credit squeeze on smaller businesses in the city prompted a visit and pledge of financial aid from Premier Wen Jiabao in October.
Among the major cities, Shenzhen declined 0.6 percent, while Guangzhou decreased by 0.3 percent from a year earlier. Compared with the previous month, prices fell in 46 cities, the statistics bureau said in the statement, after 45 declines recorded in February.
New home prices in Shanghai, Beijing, Shenzhen and Guangzhou, so-called first-tier or more affluent cities, dropped for a sixth month. Private data have also shown a sustained cooling in the housing market. Home prices fell for the seventh month in March from February, according to SouFun Holdings Ltd., the nation’s biggest real-estate website owner.
The country’s economy grew a less-than-forecast 8.1 percent in the first three months of 2012 from a year earlier, the slowest pace in 11 quarters, the government said last week.
Yuan Trading Band
Even so, China’s doubling of the yuan trading band effective April 16 signaled official confidence in the strength of the economy’s expansion and suggests policy making is unimpeded by the ouster of Bo Xilai from the Communist Party leadership.
Elsewhere in the world, Sweden’s central bank today left its benchmark interest rate unchanged at 1.5 percent amid signs the largest Nordic economy will avoid a recession after policy makers across Europe stepped in to ease debt crisis concerns. The move was predicted by 14 of 18 economists surveyed by Bloomberg News.
U.K. jobless claims rose by 3,600 in March from February, less than economists forecast, and a broader measure of unemployment fell for the first time for almost a year. The Bank of England released meeting minutes showing Adam Posen ended his push for further stimulus as officials said inflation may turn out faster than forecast.
South Africa’s consumer price index increased 6 percent in March from a year earlier, slower than the 6.1 percent recorded in February and matching the median estimate of 18 economists.
In North America, the Bank of Canada will release its quarterly monetary policy report later today.
China’s private housing market may see its “most difficult period” in the first half with “some stabilization” after that, JPMorgan Chase & Co. economists, led by Zhu Haibin in Hong Kong, said in a research note on April 13.
Existing home prices in Beijing fell 3.4 percent last month from a year earlier, while those in Shanghai dropped 1 percent, according to the bureau.
Ma Xiaoming, a senior statistician in the statistics bureau’s Urban Department, said in a statement today that a doubling, to eight, in cities reporting month-to-month price gains shows that “upward pressure on home prices” remains. Property curbs “shouldn’t be loosened,” Ma said.
Banks in the major cities of Beijing, Shanghai and Guangzhou are offering as much as a 15 percent discount off the benchmark interest rate on loans to first-home buyers, China Securities Journal reported last week, citing property agents it didn’t identify. The central bank said last month it will ensure “loan demand from first-home families” is met.