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People's Daily Online>>China Business

Home prices fall further in Nov

By Ji Beibei (Global Times)

20:36, December 19, 2011

New home prices in major Chinese cities further fell in November with more cities witnessing price drops, the official statistics showed yesterday, a sign that government measures to cool the property sector are beginning to take effect.

Among 70 cities covered in a government survey, 49 cities saw a month-on-month drop, 15 more than in October, the National Bureau of Statistics (NBS) announced yesterday.

Housing prices in 16 cities remained the same while that in the remaining five climbed no more than 0.2 percent.

"The figures (of price drops) are within expectations and reflect a sensible decline of housing prices with curbing policies," Liu Weiwei, a researcher at the Shanghai-based E-house China R&D Institute, told the Global Times.

But Jiang Xinguo, analyst at Zaihang Real Estate Consulting, said the NBS data should not be interpreted literally and factors like inflation should also be considered for a correct understanding of the data.

Some developers have reduced prices due to capital restraints or strategic adjustments in some cities and projects. China aimed to finish 10 million affordable housing units for 2011 and some units are already being sold, helping to relieve market demand, Jiang told the Global Times.

"Home prices will further drop in the low winter season," Jiang said. "An average 20 percent drop is likely for the next year if the external environment doesn't worsen."

China began to take remarkable measures to cool its red-hot property sector since April 2010. Many local governments strengthened housing purchase restrictions this year by raising the amount of down payment for first-time buyers from 20 to 30 percent and that for second homes from 50 to 60 percent.

Some large domestic developers like Vanke and R&F Properties started to cut prices in first- and second-tier cities, and the price of some apartments even fell by 20 percent, a report released by the China Index Academy said in October.

Others adopted a wait-and-see attitude, hoping for tightening policies to be relaxed.

But the policymakers vowed to continue the controls over the property sector for next year at the Central Economic Work Conference Wednesday.

And the National Development and Reform Commission announced Friday that it will further clamp down on speculative purchases and will work on ways to fight fat profits in the real estate sector.

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