Chinese house prices fell year on year for the first time since the government crack down began, which is a sign of the continued and deepening progress being made by the campaign to cool the market.
According to official data house prices fell 0.4% in March compared to last year, and prices fell across 38 of the 70 cities – making it also the first time that a majority of cities have seen prices fall. In February prices were up 0.17% year on year and fell in only 27 cities. Monthly data shows prices down 0.29% on average since February, marking the sixth consecutive month of falls.
Some analysts believe that this will herald a relaxation in the cooling policies: "The falling home price is gradually increasing the room for further policy relaxation, not only regarding the property sector," Shi Qi, a CEBM analyst in Shanghai, told Reuters. "The real estate market remains the biggest drag on economic recovery."
However, others are predicting further falls. "The authorities want property prices to fall to a 'reasonable level,' by which we infer at least a 10% year-on-year fall, before they scale back the April 2010 tightening measures," said ING economist Prakash Sakpal.
Strengthening the case for the government maintaining its grip on the market, is the fact that transactions and even prices continue to rise in some areas. The most worrying for anyone hoping for a relaxation of the policies, is the fact that prices rose month on month in Chongqing, which was one of two cities chosen by the government to trial a new property tax, the other was Shanghai. Prices rose month on month in 8 cities in March, where they only rose in 4 in February, and sales volumes also increased in March, after an abysmal couple of months.
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- Friday 20 April 2012