China's home prices fall for 8th month

China's housing prices dropped for the eighth consecutive month in April, indicating the country's property market is cooling at a stable pace.

A report released by the China Index Academy (CIA) shows that the month's average price of 8,711 yuan (1,400 U.S. dollars) per square meter across 100 cities was 0.34 percent lower than March and 0.71 percent lower than April 2011, marking the first year-on-year fall.

It is the first time home prices dropped on both a monthly and yearly basis since China initiated its new round of housing market control measures in April 2010.

"That indicates a further cooling down in the country's real estate market amid persisting tightening measures," said He Tian, director of research at China Index Academy, a Beijing-based real estate research institute.

The average housing price in China's top 10 cities was 15,391 yuan per square meter, down 0.4 percent from March and 2.6 percent from April last year, according to the report. The 10 cities are Beijing, Shanghai, Shenzhen, Guangzhou, Suzhou, Hangzhou, Chengdu, Tianjin, Nanjing and Chongqing.

"In contrast to the broader 100 cities, the figures from the 10 major cities are more persuasive as these first-tier cities better reflect the trend of the property market," said Hu Gang, an economic professor with Guangzhou's Jinan University.

Industry watchers say there are more bubbles in the property market in these first-tier cities, and their home prices are more likely to be influenced by the government controls.

To calm property prices two years ago, China adopted measures including tighter lending policies, higher down payments, a ban on third-home purchases, property tax trials and supply of more low-income housing.

Premier Wen Jiabao has more than once urged local governments not to relax curbs on home prices, saying property control is one of the most important tasks for this year.

While some purchasers are sanguine about falling home prices, worries still linger over negative effects brought by the cooling property market to the whole economy.

The shrinking investment in the property market is believed to be responsible for the slowing economy in the first quarter of 2012.

As of Thursday, 103 domestically listed developers had released first-quarter reports, showing their net profit fell 1.33 percent to 7 billion yuan. The biggest four developers had net profit of 2.52 billion yuan, down 4.26 percent.

With property curbs set to continue, developers face increasingly tight cash flow in the second half of the year, and more small developers will go bankrupt, industry analysts said.

Not only property developers are plagued by the sluggish market, but also local governments have to withstand the losses as a result of less tax and land leasing revenues, industry watchers point out.

"It is doubtful whether local governments will thoroughly carry out the central government's policy on calming the property market as this is against their own interests," according to Hu.

Local governments might roll out subtle policies to ease control over the property market, he added.

With this backdrop, the Chinese central government should further stress its strict control over the property sector.

"The central government will stick to its policy of curbing property speculation in a bid to bring runaway home prices under control," said Qin Hong, director of the Policy Research Center under the Ministry of Housing and Urban-Rural Development.