House prices fall at slower pace in August: survey

Potential homebuyers examine a property project model in Hangzhou, capital of Zhejiang province, on Sunday, after the city lifted all restrictions on property purchases. XINHUA

Analysts say data show govt measures have had little effect in boosting demand

The average price of houses in China fell in August for the fourth consecutive month, though at a slower pace, according to a survey by the China Index Academy, an economic research institute and property data provider.

Average new house prices fell 0.59 percent in August, compared with 0.81 percent in July, according to the survey of home prices in 100 cities.

More local governments will likely loosen or lift restrictions on property purchases to boost demand and short-term transaction volume may rebound as property developers accelerate their price-cutting pace, the institute said on Monday.

Among China's 10 largest cities, Hangzhou, capital of Zhejiang province, saw the biggest monthly decline of 1.81 percent; new home prices in Beijing slipped by 0.05 percent; and prices in Shanghai fell by 0.33 percent.

Among the 46 Chinese cities with property purchase restrictions, 37 have lifted or canceled the restrictions.

Analysts said that the August data reflected that the government's loosening policy has not had any noticeable effect on property prices.

On a year-on-year basis, new home prices in China continued to rise in August by 3.15 percent, but the pace slowed, by 1.57 percentage points, for the eighth consecutive month, according to the survey.

More property developers may resort to price cutting to boost sales, as the market supply may reach a seasonal peak in the coming months, the China Index Academy said.

Property transaction volume may rebound in the short term because credit conditions in some cities have improved, although the national credit policy still remains tight, it said.

"September and October, which are usually a hot season for property sales, could be an important observation period," said Chen Zhi, secretary-general of the Beijing Real Estate Association.

If the transaction volume could rebound further then the market sentiment could improve in the remaining months of the year, Chen said.

He said that the prospects for the real estate sector remain full of uncertainties in the second half of the year.

"We are expecting more price cuts in projects in second-tier cities but the situation could remain unchanged in the third quarter, although more local governments have canceled home purchase restriction policies," said Zhang Dawei, director of market research at Beijing-based Centaline Property Agency Ltd, a property consultancy company.

But some developers are unwilling to cut prices and seek to provide customers with more value-added services to boost sales.

Shimao Group has announced a plan to offer its prospective buyers a wide range of custom-tailored services, including home decoration, education, traveling and medical care.

"We provide a product not merely for living in but also a lifestyle," said Cai Xuemei, vice-president of Shimao. She said the company will not rely on price cuts to stimulate sales as most other property developers do.

Other developers have strengthened their efforts to explore the commercial and office sector to offset the risks in the residential sector.

The Beijing branch of Vanke Co Ltd, the country's largest property developer by market value, has decided to build up three product lines in the office sector, covering different markets from low to high end.

"Our sales target in Beijing will reach 20 billion yuan ($3.26 billion) in 2014, among which 35 percent will come from the non-residential products. And the sales from the office sector will increase further in 2015," said Mao Daqing, executive vice-president of China Vanke Co Ltd.

A high contribution from the commercial and office sector has also been a major reason for the strong performance of Sino-Ocean Land, a Hong Kong-listed property developer, in a sluggish residential market. The company's net profit soared 58 percent to 2.2 billion yuan in the first half of 2014, according to Li Ming, chairman and CEO.