Chinese House Prices Continue to Fall
Home prices in nearly two-thirds of China’s major cities fell in February from the previous month, as measures taken to tame the property market continue to have an impact.
Beijing’s National Bureau of Statistics (NBS) said on Sunday that 45 out of 70 large and midsized cities tracked by the government saw a fall in new home prices month-on-month in February. The previous month, prices fell in 48 cities.
Prices in a further 21 cities were stable and just four cities experienced price rises, it added. On a year-on-year basis, 27 cities saw new home price declines in February, up from 15 in January.
The news came in the wake of Premier Wen Jiabao’s warning last week that home prices remain at far from reasonable levels. He called on the government to sustain efforts to regulate the housing sector.
Relaxing curbs could cause “chaos” in the market, Wen said. Beijing has introduced a range of measures aimed at curbing runaway property prices over the past year, including restrictions on purchase of second homes, increasing minimum downpayment requirements and introducing property taxes in select cities.
Easing home prices have contributed to concerns about an economic slowdown in China, which is already forecast to slow this year from 9.2 per cent growth in 2011. But government is unlikely to relax measures to cool the market despite those fears, property analysts said.
Property developers have been hit hardby the tightening policies and a lack of funds after the government raised interest rates and restricted bank lending to rein in rising inflation and cool real estate prices.
Meanwhile, Christine Lagarde, IMF managing director called on China to change its growth model, in light of weak global economic conditions.
Speaking in Beijing on Sunday, she praised China for bringing down its current account surplus to less than 3 per cent of gross domestic product from over 10 per cent in 2007.
But she added: “The global context reinforces the importance of China continuing to forge ahead – by maintaining a prominent role in global policy discussions and by sustaining efforts to accelerate the transformation of the Chinese economy.”
“I am encouraged that the Chinese authorities are focusing, not just on the level of growth, but on growth that is more widely shared across the entire population, as underscored by the policy agenda in the recent 12th Five Year Plan,” she said.