This is a shock. We recently reported on the shock growth in Chinese house prices and sales in May recorded by developers and real estate websites, but now we have official government data showing that prices continued to fall but more slowly in May.
Prices in the eastern city of Wenzhou fell fastest with a decline of 14 percent slump on the year, prices in Beijing and Shanghai fell by as much as 1.6 percent during the period the data from the statistics bureau shows.
While the rate of decline may have been slower, prices fell in 57 out of the 70 cities tracked by the statistics bureau, this is up from 46 cities in April.
In the reports that prices had risen in May, sources including Soufun the largest real estate website in China, and leading business paper the China Business Herald put the growth down to fine tuning of the property market restrictions at local authority level. Although prices did fall in more cities, it is agreed that local authorities are making changes to the law where possible.
"With further housing market corrections and sluggish land sales, local governments have the incentive to introduce various measures to circumvent the property tightening measures," Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase & Co., wrote in a note to clients today. "The conflict of interests between the central and local governments could intensify in the coming quarters."
So, the local authorities are bending while the government is steadfast, in this mix the local authorities could end up prolonging the restrictions. However, some analysts are ready to call an end to the restrictions in the next few months.
"China's property market is approaching gently the bottom of its decline path and I expect we'll see a touchdown sometime over the next three to four months," Peter Churchouse, managing director of Portwood Capital, a Hong Kong-based property investment firm, said in a Bloomberg Television interview. "They've definitely succeeded in slowing the market down. They've engineered it pretty nicely so far."
Time will tell as always.
- Wednesday 20 June 2012