April housing price jump sets a record

09:37, May 12, 2010      

Email | Print | Subscribe | Comments | Forum 

The year-on-year growth rate of China's April home prices hit a record high, despite a preliminary pinch from the government's stern real estate tightening measures.

Yet cooling appeared as sales slowed and area under construction decreased. Analysts predicted a sharp price decline in large cities like Beijing in three to six months.

Housing sale prices in 70 large- and medium-sized cities climbed at a record pace of 12.8 percent in April, figures from the National Bureau of Statistics showed Tuesday.

Beijing quickened its cooling steps to discourage speculative house buying starting April 15. The measures include restricting pre-sales by developers, increasing down payments for second home purchases from 40 to 50 percent, demanding that banks suspend mortgage loans for third home buyers, and raising banks' minimum reserve requirements for the third time this year.

It has been widely expected that a housing price reduction would be seen this year. The China Banking Regulatory Commission on April 20 demanded large- and medium-sized banks carry out quarterly stress tests to assess their expo-sure to mortgages.

Some Chinese banks have begun to consider uncertainties in property policies including a controversial possible property tax while conducting stress tests, the 21st Century Business Herald reported.

The Guangzhou-based paper said most banks it interviewed said they could withstand a 30-40 percent decline in home prices.

Lei Hua, a senior analyst with the China Index Academy (CIA), said the non-performing mortgage loan ratio is not high and a 30-40 percent price drop won't increase the ratio.

"Sufficient funds hold back developers from reducing prices and house price cuts won't be seen soon," Lei said, adding the decline will be less than 30 percent.

However, easing has already appeared. NBS figures showed commercial building sales by area in April declined by 1.55 million square meters from March and the area under construction last month, 134 million square meters, was less than March's 174 million square meters. The real estate development climate index dropped 0.23 percentage points to 105.66 in April, NBS figures showed. It was the first drop after 12 months of increases, but the index still remained above 100, indicating growth. A reading below 100 shows contraction.

CIA figures showed commercial residential property sales by area in two thirds of the more than 32 cities it surveyed fell for three straight weeks starting April 19.

"Although prices of second-hand houses have already seen downside symptoms, the effect of the recent curbs on new housing prices won't show for three to six months. A decline, which will be 20-30 percent, will only take place in large cities like Beijing," Lei said.

Source: Global Times


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 26, a resident passes by a flower terrace decorated for the coming National Day. (Xinhua/Hang Xingwei)
  • The photo, taken on Sept. 26, shows the SWAT team ready for the joint exercise. (Xinhua/Wangkai)
  • Two metro trains in Shanghai collided Tuesday afternoon, and an identified number of passengers were injured in the accident, the Shanghai-based eastday.com reported. Equipment failures were believed to have caused the crash on the Line 10 subway, Xinhua quoted local subway operator as saying.
  • An employee at a gold store in Yiwu, located in east China's Zhejiang province, shows gold jewelry on Monday.(Xinhua/Zhang Jiancheng)
  • Tourists ride camels near China's largest desert lake Hongjiannao in Yulin, north China's Shaanx Province, Sept. 24, 2011. Hongjiannao is shrinking as a result of climate change and human activities, and may vanish in a few decades. Its lake area, which measured more than 6,700 hectares in 1996, has shrunk to 4,180 hectares. Its water level is declining by 20-30 centimeters annually and its water PH value has risen to 9.0-9.42 from 7.4-7.8. (Xinhua/Liu Yu)
  • Actors perform royal dance at the Gyeongbok Palace in Seoul, Sept. 27, 2011. A ceremony commemorating the 38th South Korea Sightseeing Day was held in Gyeongbok Palace on Tuesday. (Xinhua/He Lulu)
Hot Forum Discussion