Misery continues for the Chinese housing market as prices fall to a 14 month low in April according to data from SouFun Holdings, the nation's biggest real estate website owner. Worse, Premier Wen Jiabao reiterated in March the nation will "resolutely" maintain curbs on the property market.
According to the SouFun report, prices fell for the eighth consecutive month in April, with a decline of 0.3% compared to March. Prices in the southern business hub Shenzen were hit hardest with a fall of 0.8% on the month, followed by Shanghai with 0.7%. Prices in Beijing fell 0.4% on the month. This took the average Chinese house price down to 8,711 Yuan ($1,382) per square meter.
"Developers are cutting prices to accelerate sales," said Johnson Hu, a Hong Kong-based property analyst for CIMB-GK Securities Research. "Home prices will fall further because developers are facing big pressure on increasing inventory."
National indices take a lot of stick, but in China there is no doubt about the misery as the latest round of price cuts have brought yet more protests to developers sales offices. Last week 400 homeowners stormed the office of Baoyi Real Assets in Ningboo a town in the Zhenai district and smashed the place up. The protesters then went off to block the nearby expressway to bring local authorities attention, but were convinced otherwise by police.
Elsewhere in the same district the decision by three developers to slash prices (by between 2000 and 4000 Yuan according to the Beijing Times) for new buyers in Hangzou, brought previous-buyers-come-protesters to demonstrate outside their sales offices wielding signs and funeral wreaths.
At present it seems there is no plan in place to deal with this situation, which is untenable. The consensus of opinion seems to be that the homeowners should put up and shut up, as they are adults and bought knowing prices can rise as well as fall. But others suggest caution on something that is purchased using all of a family's life savings. So far the government's only focus is on bringing more affordable housing and mortgages to bear.
- Wednesday 09 May 2012