Home prices dropped in Guangzhou

Many real estate companies have lowered prices or launched promotions for homes in Guangzhou, Beijing-based Economic Information Daily reported Monday.

This is the first sign that first-tier cities in China have started to see home price drops amid a tightened credit policy and a new round of control measures on property markets launched by local governments.

Poly Real Estate Group Co, a Beijing-based State-owned property developer, has launched a sales promotion for its three complexes in Guangzhou, the economic hub of South China's Guangdong Province, allowing homebuyers to make a 10 percent down payment, lower than the usual 30 percent, according to the report.

Zhu Zhuohan, regional manager of real estate consulting firm Centaline Property's branch office in Guangzhou, told the Global Times Monday that many local property developers have even rolled out direct price cuts. Guangzhou-based Times Property, for instance, is now offering a 12 percent discount for all its houses in the city.

"Guangzhou's current average home price per square meter has dropped by 10 percent from January this year," Zhu said.

More property companies will follow suit in the near future, he noted, partly citing financial pressure from banks' tightened lending policy.

Fuzhou-headquartered Industrial Bank Co said in a statement on February 24 that it had halted some types of loans to property developers until the end of March, with the aim of adjusting its asset structure and improving its services.

The tightening of credit is also affecting banks' mortgage policies.

Many banks have canceled the 15 percent discount on mortgage rates for first-home buyers, and some smaller banks even raised their mortgage rates to 130 percent of the benchmark rate, according to media reports. Some local governments including Nanjing in East China's Jiangsu Province also unveiled new measures to control high property prices.

Second- and third-tier cities such as Hangzhou, Nanjing and Qinhuangdao have already witnessed a slump in home prices in February, according to media reports.

And according to data from the National Bureau of Statistics Thursday, home sales volume fell 1.2 percent in the first two months of 2014 to 93.77 million square meters with the growth rate dropping 18.7 percentage points from the annual growth in 2013.

Zhang Dawei, marketing director at the Beijing office of Centaline, said that big cities like Beijing may also see a drop in home prices if the credit policies are further tightened, even though Beijing's current new home prices are stable.

Home sales have already dropped in Beijing due to sluggish demand as a result of the tightening credit policies, Zhang told the Global Times on Monday.

Data from Centaline showed that Beijing's home sales, including new and secondhand homes, in the first half of March reached 7,252 units, marking a new low for the past six years.

However, Li Zhanjun, research director at Shanghai-based E-House China R&D Institute, holds a different opinion, believing Shanghai will very likely see an increase in home prices as well as sales in March and April.

Home price cuts in Guangzhou and other smaller cities cannot be considered a nationwide market trend, Li told the Global Times Monday, noting that both Shanghai's home prices and sales stand stable at present.