2012 Sees Home Prices Fall In Many Large Cities In China
Nearly three quarters of large Chinese cities saw a decrease in home prices in December.
That was the greatest number of cities to see such a decline in any month of 2011 - a sign that the government's tightening measures are continuing to take hold.
December saw the prices of new homes in 52 large cities out of a statistical pool of 70, decrease below what they had been a month before, the National Bureau of Statistics reported on Wednesday. The prices in 16 other such cities, meanwhile, remained unchanged.
In November, 49 of the cities had seen the prices of new homes drop below what they had been in October.
The December price declines, for their part, varied from place to place.
In Beijing, home prices dropped by 0.1 percent from the month before and in Shanghai they declined by 0.3 percent. Wenzhou, a city where private business has boomed, posted a 1.9-percent drop, the deepest recorded for the month.
Chris Brooke, president and CEO of CBRE Asia, said 2012 will be a difficult year for the property industry in the country.
"As the government's tightening measures continue, China's home prices are expected to see a 10 to 15 percent drop on average," Brooke said. "But different cities and different locations will have different performances."
For Liu Chunyan, general manager of Beijing WorldUnion Properties Consultancy Co Ltd, the first half of 2012 will see home prices decline further and the market may hit bottom toward the middle of the year.
"We estimated that home prices may drop 20 to 30 percent on average this year and that the fall will expand throughout the country, including to the third- and fourth-tier cities that were less affected last year," Liu said.
Contributing to a sluggish property market this year will be an increasing housing supply, a drying up of cash flow to property developers and an expectation among buyers that home prices will continue to drop, analysts said.
The construction of houses will add to the stock of unsold properties this year. In Beijing, 22 months will be needed for all of those properties to be bought if the existing pace of sales persists, Liu said.
According to WorldUnion Properties, consumer willingness to buy a house reached a record low in the fourth quarter, down 2.4 percentage points from the previous quarter.
"Buyers have long expected to see a price drop," Liu said. "And only a big price cut, between 10 and 15 percent for instance, can really stimulate them to buy."
Many industry insiders have said they expect to see a decline in property sales this year. But Ren Zhiqiang, chairman of Huayuan Real Estate Co Ltd, said he believes there will be a small rebound instead.
"The increase in sales will be partly driven by government-subsidized housing, since the Ministry of Housing and Urban-Rural Development aims to construct 5 million such homes this year," Ren said.