Visitors check different housing models on display at Beijing Autumn Property Fair held Saturday. September and October are normally peak season for property sales. However, due to purchase limitation policy, the demand at the fair is sluggish. Photo: CFP
More Chinese cities registered a month-on-month decline in home prices or slower price growth in August, according to the National Bureau of Statistics (NBS) on Sunday.
Analysts said that the central government's efforts to control property prices have not been fully effective due to a number of complex factors, including unwillingness by local governments to adopt stricter measures.
Prices of newly built homes in 46 out of 70 major cities declined or remained unchanged in August month-on-month, compared to 31 cities in July, the NBS posted on Sunday on its website.
As for the existing homes, 43 out of 70 major cities saw prices decline month-on-month, compared to 34 in July.
The Ministry of Housing and Urban-Rural Development issued a call on August 17 for more second- and third-tier cities with booming housing prices to start implementing the purchase-limitation policies that were announced over a year ago.
At least 30 more cities are expected to place purchasing limits before September, but as of last week, only two cities, Taizhou and Quzhou in Zhejiang Province, had announced specific measures.
Some cities like Yueyang, a prefecture-level city in Hunan Province, recorded a 7.8 percent year-on-year price increase in August.
"Home prices in China's second- and third-tier cities are still rising rapidly, mainly because the under-pressure local governments, who heavily depend on land sales and housing development projects as a source of their revenue, are hesitant to adopt more strict policies," Chen Baocun, deputy director of the research institute of the National Real Estate Managers Association, told the Global Times on Sunday.
Large developers, such as Vanke which saw its sales volume increase fast in second- and third-tier cities in the first half this year and had strong capital base, will not cut prices in a short term, according to Chen.
"Small-sized developers, who are under cash shortage pressure because of credit tightening policies, would like to sell their building projects as a whole unit to bigger developers rather than sell to individual homebuyers at discounted prices, as the former method could help them to recover capital faster," Chen noted.
Another industry watcher said domestic real estate market might not see home prices dive in the coming months, unlike in 2008 when the global financial turmoil started.
"Domestic liquidity so far is still excessive, and people who have money in hand would like to invest in properties to maintain their capital value, especially as inflation expectations still exist," Liu Yuan, a senior research manager at property brokerage Centaline China Real Estate, told the Global Times.
"Unlike in 2008 when people were concerned about recession in the Chinese as well as foreign economies, investors now have confidence in asset price increases," Liu noted.
A central bank survey of 20,000 residents last week found that about 37.9 percent residents expect home prices to rise for the rest of the year.