In November, home prices in China continued to drop for the second consecutive month. Despite the government’s claims it was regulating the housing market, homes in over 70 cities saw the drop. The Wall Street Journal reports:
Data on 70 Chinese cities released by the National Bureau of Statistics and analyzed by The Wall Street Journal show average home prices declined by 0.17% in November compared with October, compared with a 0.13% decrease in October and a 0.01% increase in both September and August. Prices rose 2.3% on average in November from a year earlier, moderating from a 3% increase in October.
Prices of newly built homes in major cities such as Beijing, Shanghai, Shenzhen and Guangzhou—often described as China’s first-tier, or most developed, cities—were marginally lower compared with October, the statement said.
Analysts said that while the central government has shifted its priority to supporting economic growth from combating inflation, it remains set on controlling property prices. The People’s Bank of China cut banks’ reserve-requirement ratio by half a percentage point effective Dec. 5, helping ease liquidity in the country.
There are predictions that the prices will drop further due to the slowed economy. Business Week adds:
Chinese developers will face challenges over the next 12 to 18 months including slowing sales, tight bank credit and downward pressure on prices and profit margins, Moody’s Investors Services said in a Dec. 15 report.
The government may ease its property measures in the second half of next year if home prices in major cities include Beijing and Shanghai fall 20 percent from their 2011 peaks, according to Mizuho’s Shen. Shanghai’s new home prices gained 2.4 percent from a year earlier in November, and those in the capital city added 1.3 percent.