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Housing prices decline by 0.7% in big cities in April

By Hu Yuanyuan (China Daily)

13:14, May 03, 2012

Visitors look at models of a housing project at the Nanjing (Spring) Real Estate Trade Fair on April 12. Average home prices in 100 Chinese cities fell 0.71 percent year-on-year in April, the first such drop since June 2011. [Photo/China Daily]

Average home prices in 100 Chinese cities fell 0.71 percent year-on-year in April, the first year-on-year drop since June 2011, the country's largest real estate website said on Wednesday.

The prices fell 0.34 percent month-on-month, the eighth consecutive fall, according to the China Real Estate Index System, which is affiliated with SouFun Holdings Ltd.

"That indicates a further cooling down in the country's real estate market amid persisting tightening measures," said He Tian, director of research at China Index Academy, a Beijing-based real estate research institute.

"As property developers' cash flow further tightens, we believe property prices in key cities such as Beijing and Shanghai will slide 5 to 10 percent this year, while second- and third-tier cities may see a drop of more than 10 percent," He added.

CREIS said the average home price in the 10 biggest cities was down 2.6 percent year-on-year at 15,391 yuan ($2,443) a square meter in April, the fourth consecutive fall on a yearly basis.

According to Standard Chartered Bank, developers are a little more confident about apartment sales, and price cuts of 10 to 20 percent are apparently helping demand.

"Inventories are still rising. Developers expect more cuts of up to 20 percent," said Stephen Green, an economist at Standard Chartered Bank. The bank presented the results of a survey of 30 residential developers in eight second- and third-tier cities taken in February and March.

As of last Thursday, 103 domestically listed developers had released first-quarter reports. Their net profit fell 1.33 percent to 7 billion yuan. The biggest four developers had net profit of 2.52 billion yuan, down 4.26 percent.

With property curbs set to continue, developers face increasingly tight cash flow in the second half of the year, and more small developers will go bankrupt, industry analysts said.

Chinese banks made 242.7 billion yuan in property loans in the first quarter, down 54 percent, central bank data show. Property lending fell 38 percent in 2011.

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