China home prices fall as trends diverge among cities

Photo taken on Jan. 16, 2015 shows residential buildings in Taiyuan, capital of north China's Shanxi Province. Home prices declined in most Chinese cities in December as 66 saw month-on-month price drops among 70 surveyed cities, the National Bureau of Statistics announced on Jan. 18, 2015. (Xinhua/Zhan Yan)

China's real estate market has extended its slump with new home prices in December registering month-on-month declines in a majority of surveyed cities.

Of 70 large and medium-sized cities surveyed, 66 saw new home prices drop in December from the previous month, according to data released on Sunday by the National Bureau of Statistics (NBS).

Meanwhile, new home prices were flat in Zhengzhou, Wuhan, and Ganzhou last month, while Shenzhen saw prices rise 1.2 percent from November, the NBS data showed.

For existing homes, prices in 60 cities fell in December from the previous month, while eight cities recorded gains, with the first-tier cities of Beijing, Shanghai, and Guangzhou seeing prices gain 0.2 percent, 0.4 percent, and 0.2 percent, respectively. Nanjing and Urumqi were flat in price growth, the data showed.

On a year-on-year basis, 68 cities saw new home prices decline in December. Meanwhile, 67 cities reported price drops for existing homes.

Despite widespread price drops, the rates of decline have narrowed for both new homes and existing homes on a monthly basis, according to analysts.

"On average, prices of new homes and existing homes in December in the 70 cities fell 0.2 percent and 0.3 percent respectively from a month ago," said NBS statistician Liu Jianwei.

The rate of price decline fell by 0.2 percentage point compared to November for both new and existing homes, Liu said.

Kuang Xianming, director of the research center for economy under the China Institute For Reform and Development, said that downward pressure has remained in China's property sector based on December's figures. However, some changes, though minor, should not be ignored, he said.

"Analyzing the market based on price changes, the market has largely maintained a similar trend as seen in November. But if this situation continues, and especially when prices start to recover in some cities, we might be able to conclude that home prices in Chinese cities are bottoming out," Kuang said.

The NBS data showed that home price trends in first-tier cities and smaller cities diverged last month, with the nation's four biggest cities of Beijing, Shanghai, Guangzhou and Shenzhen seeing average prices rise by 0.1 percent and 0.4 percent from the previous month for new homes and existing homes, respectively.

Liu said that the price rebound came amid a sales recovery in first-tier cities, all of which saw the number of homes sold surge more than 15 percent in December from a month ago, Liu said.

He said that the recovery was boosted by government policy changes intended to avoid a sharp slowdown in the sector out of fear of jeopardizing the broader economy.

Those moves included fewer restrictions on home purchases, eased mortgage rules, and an interest rate cut in November.

China's property market began a downturn in 2014 after a years-long boom that catapulted home prices to record highs. The downturn has also weighed negatively on the economy, with third-quarter growth sliding to 7.3 percent, the lowest level since the 2008-09 financial crisis.

The NBS is scheduled to release major economic data, including gross domestic product and home sales, on Tuesday.