New policies needed to support sector: experts
China's real estate market slipped back in October according to official data released Wednesday, showing that excessive inventories remain an issue, although more government policies are expected to help tackle the problem, experts said.
Among 70 large and medium-sized Chinese cities monitored by the National Bureau of Statistics (NBS), 27 saw a month-on-month rise in new home prices in October, down from 39 in September, while 33 of them saw new home prices drop, up from 21 cities a month ago, data from the NBS showed on Wednesday.
On a yearly basis, 16 major cities reported new home price increases in October, while 54 cities saw new home prices fall.
Liu Jianwei, an NBS statistician, noted on Wednesday that the real estate market continued to show different performance in different cities.
New home prices in most first-tier cities rose "relatively sharply" in October, Liu said.
Shenzhen saw new home prices surge by about 40 percent year-on-year in October, up from a rise of 38.3 percent in the previous month and the sharpest increase among major Chinese cities.
Beijing saw its new home prices rise by about 8 percent year-on-year in October, while Shanghai's new home prices jumped by more than 12 percent.
Yang Guang, an agent at real estate firm Homelink in Beijing, told the Global Times on Wednesday that demand for new homes in the area he's in charge of, which is along Dongsanhuan Road in Chaoyang district, was "stable" in October compared with the previous months.
But he also noted that it's normal for house prices to fluctuate every few months.
Most second- and third-tier cities, meanwhile, saw a slide in new home prices year-on-year in October, Liu noted.
Yang Hongxu, a senior research fellow at E-house China R&D Institute, told the Global Times on Wednesday that many small cities in China still have excessive housing inventories, which suppresses house prices in those cities.
China's weak real estate market was also reflected in the slumping investment data in October.
According to a report Bank of Communications sent to the Global Times on Wednesday, China's real estate investment rose by 2 percent year-on-year in the first 10 months, falling back from 2.6 percent growth in the first nine months.
The falling investment has mainly been caused by slumping demand for land purchases and for new construction projects.
However, government support is expected to help improve the situation. According to a report by Guangdong-based 21st Century Business Herald on Tuesday, it is highly likely that the central government will roll out a series of policies in the foreseeable future to boost the domestic real estate market.
"The real estate market needs policy stimulus," Yang said. It's hard to be sure about how effective the policies will be, but "something would be better than nothing," he noted.
The policies could focus on reconstructing less developed towns and poorer urban areas, the report said, adding that this could contribute to using up some of China's excessive housing inventories and also offset the influence of slumping investment in commercial buildings.
But Yang noted that reconstruction of poorer urban areas has been going on since 2009. "Now more than half of the work has been accomplished, and the scale of the remaining work will be limited," he said.
Another policy that could have a favorable impact on the domestic real estate market is the central government's decision on October 29 to allow all couples in China to have two children. The policy might prompt more domestic families to purchase larger homes, such as ones with three or four rooms, Yang noted.
But Yang from Homelink said it might take time for this effect to become noticeable. "People won't buy new houses immediately after they plan to have more children," he noted.
Other policies have already been launched this year to help support the domestic housing market, such as cuts in benchmark interest rates and relaxation of the down payment requirements for first-time buyers in a number of cities.
