Housing prices cooling down: NBS

The average home sale prices in 70 large- and medium-sized cities rose slightly in June, but the growth rate saw a drop of 1 percentage point over the previous month, showing the housing policies may finally be working.

Home prices last month dropped 0.1 percent month-on-month, leading to the first slide in 16 months, the National Bureau of Statistics (NBS) Monday said on its website.

The average price of commercial residences as a whole in all of the cities decreased 0.1 percent over the previous month, with affordable houses remaining unchanged and high-end residences seeing a 0.2 percent drop, the data said.

But after months of waiting for the government's housing policies to take effect, analysts have begun to worry that the potential side effects may derail the economic recovery.

"The government is facing a dilemma in clamping down on prices because real estate plays such a pivotal role in the economy," Li Zhanjun, an analyst at the E-house China Reaserch and Development Institute.

Home sales areas in the first half of this year reached to 394 million square meters, up 15.4 percent over the same period of last year, but representing a drop of 7.1 percentage points over the first five months of the year, the NBS data said.

"The policies are affecting people who want to buy second homes, not just speculators as the government originally intended," Li said.

The country's economy has already started slowing down, mainly due to the lack of credit. The Purchasing Manufacturer's Index fell to 52.1 in June, showing a sign of contracting manufacturing growth. The stock market has been one of the world's worst performers this year, second only to embattled Greece, having shed over a quarter of its value in the past few months.

The central government asked agencies at the end of June to survey the property market in Beijing, Shanghai and Guangzhou, and ask for opinions from local nongovernmental research institutes as to avoid policies that might harm the country's economy, according to the Shanghai Securities News.

Officials have been issuing announcement after announcement to allay consumer's fears over prices. While most middle-class still complain about government ineffectiveness, analysts including Jia Wolong, chairman of the China Real Estate and Business Cooperative Federation, have begun sup-porting the policies.

"Our government made cautious decisions to control the soaring prices," Jia said, "They should begin declining this autumn."

Source: Global Times