New home prices drop significantly in Q1

New home prices in China's first-tier cities dropped significantly in the first quarter of this year from a year earlier, and will continue to go down in coming months with more houses for sale, industry experts said over the weekend.

The average new home price in Beijing, including affordable houses, fell by 20.7 percent year-on-year to 12,326 yuan ($1,948) per square meter in the first quarter, Chen Zhi, secretary-general of the Beijing Real Estate Association, said Saturday at the International Property Expo held in Beijing.

"The price drops were seen mainly in Beijing's suburban areas such as Tongzhou and Changping, while prices of new homes in central areas stayed relatively flat," Zhang Dawei, an analyst at Centaline Property in Beijing, told the Global Times Sunday.

The total home transaction volume in Beijing, including new homes and existing homes, stayed at 18,000 units in the first quarter, a 14.2 percent year-on-year decrease and a record quarterly low since 2007, Chen said. "About 90 percent of new home buyers in Beijing were first-time buyers, indicating speculative demand for houses has dropped."

New home prices in Shanghai and Shenzhen also dropped significantly by 13.07 percent and 13.98 percent year-on-year in the first quarter, while transaction volume fell by 18.34 percent and 18.49 percent respectively, during the period, figures from the China Index Academy (CIA) showed.

However, the transaction volume in 33 domestic cities that the academy monitored including Beijing, Shanghai and Shenzhen experienced month-on-month increase in March, fueling suspicion that the housing market is recovering.

"The transaction volume was mainly boosted by property developers' sales promotions for new homes," Zhang Huaxue, a senior analyst at CIA's branch in Guangzhou, told the Global Times Sunday.

Zhang expects that the transaction volume will continue to rise in the coming months, as property developers increasingly put more new homes for sale to allay cash shortages.

"Top-tier cities will continue to see monthly drops in new home prices as tightening policies continue and developers increase supplies," he said.

There are 91,000 units available for sale in Beijing, and property developers should actively lower prices to boost sales, Wang Yantao, an official with Beijing Municipal Commission of Housing and Urban-Rural Development, said at the expo Thursday.