China’s home prices fell to a 16-month low in May as officials pledged to keep property curbs that have sapped buyer demand, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.
Home prices declined 0.3 percent from April to 8,684 yuan ($1,364) per square meter (10.76 square feet), SouFun said in an e-mailed statement today, based on its survey of 100 cities in the country. That’s the lowest since January 2011 and the ninth month-on-month drop, the longest stretch since it started compiling the data in July 2010.
The Housing Ministry said last month China will steadfastly continue curbs on the housing market and won’t flip-flop on its policies, Shanghai Securities Journal reported. This followed a pledge by the State Council, or Cabinet, in April to stick with existing property controls implemented over the past two years, where the government tightened down payments and mortgages, and imposed restrictions on the number of homes families can buy.
“The external economic environment is deteriorating and it is impacting China’s property market,” said Simon Lo, Hong Kong-based executive director of research for Asia at realtor Colliers International. “The Chinese government probably realizes this and we’re expecting them to slowly relaxing the curbs in the second half.”
Housing values dropped in 73 of the cities while 26 posted gains, with one reporting no changes in residential prices, SouFun said. Prices in the 10 biggest cities that include Beijing and Shanghai retreated 0.5 percent from April, and values dropped 3.2 percent from a year earlier, SouFun said.
While the government maintained its housing curbs, it helped eased funding by lenders. The central bank lowered the amount of cash that banks must set aside as reserves three times since November to boost liquidity and spur loan growth.
Banks in Beijing started offering mortgages to first-home buyers at or below the central bank’s benchmark rate in February, according to Bacic & 5i5j Group, Beijing’s second-biggest real estate brokerage.