Housing prices in 100 major cities in China dropped on a monthly basis for a third consecutive month in November and posted their biggest month-on-month decline this year, according to the privately compiled China Real Estate Index System (CREIS).
The decline provides further evidence that the government's two-year tightening campaign is cooling the property market amid signals it is now trying to slow the decline and its impact on the rest of the economy.
The data came after the People's Bank of China (PBOC) said on Wednesday it would cut banks' reserve-requirement ratio by half a percentage point to 21%, indicating Beijing has shifted its priority to supporting economic growth from combating inflation.
But the PBOC move is meant to ease the liquidity situation for the overall economy and is not aimed at the property sector, the official People's Daily reported yesterday, citing industry sources.
"It doesn't signal that property-tightening measures will be loosened and it will be difficult to change the declining property-price trend," the report said.
In theory, the reserve-ratio cut should help property developers to get development loans and home buyers to get mortgages, but with China's property tightening measures still in place, it remains to be seen whether banks will actually support these market participants, the newspaper said, citing Weiye Property Consulting assistant manager Hu Jinghui.
CREIS said yesterday a survey of property developers and real estate agencies showed the average home price last month was 8,832 yuan (S$1,781) a sq metre, down 0.3% from 8,856 yuan in October. The average November price was the lowest since May, when it was 8,819 yuan.
The CREIS survey, conducted monthly with online real-estate brokerage SouFun Holdings, has been watched widely since China scrapped a national property price index in January. It showed property prices in 57 cities declined last month from October, while prices in 43 cities rose. Average prices for new property last month climbed 4.06% on a year-on-year basis, a smaller increase than October's 5.21% gain.
Chinese Premier Wen Jiabao and Vice-Premier Li Keqiang recently said that China would resolutely maintain property-tightening measures amid speculation that controls might be eased if a steep drop in housing prices hurt economic growth.
The government earlier this year implemented higher interest rates and limits on house purchases to curb speculation. The property price declines in some areas are putting pressure on developers and on local governments that depend on land sales for revenue.
Source: Dow Jones
For the benefit of our non-Chinese speaking readers, the sign board in the picture says "Home prices will not be (water) diving. It is just doing push-ups".