House prices cool, sales plummet

The cost of homes in major cities continues to rise, but the growth rate may slow, Hu Yuanyuan reports

Zheng Peng, a 28-year-old company executive in Beijing, is sitting on pins and needles these days. Any news about home prices makes him nervous.

He bought a one-bedroom apartment outside Beijing's North Fifth Ring Road in early March - a time of the year when buyers can usually get a good bargain. But this year, things are a bit different. After Zheng made his purchase, an increasing number of reports said China's real estate market was showing signs of cooling.

"I really hate these media reports that always have one-sided views," said Zheng. "Do you think home prices really will fall?"

Property market shows signs of cooling down

Home price growth slows, further moderation eyed

Facts speak louder than words. According to the National Bureau of Statistics, new home prices in 57 cities out of 70 major cities across the country saw an increase month-on-month in February. The number of cities experiencing such growth reached a record low in the past 13 consecutive months - and the growth rate has been shrinking.

Moreover, the number of home sales is plummeting. According to Century 21, a major real estate brokerage firm, the number of transactions in the pre-owned home market in most of China's major cities, including Beijing and Shanghai, all saw a drop of more than 50 percent year-on-year in the first quarter.

Beijing, for instance, posted a 65 percent sales decline in the pre-owned home market and a 44 percent fall in the new home market in the first three months of this year. The situation in Shanghai was similar, with transactions decreasing 56 percent in the pre-owned home market and 40 percent in the new home market, both reaching record lows in the past five consecutive months, statistics from Century 21 showed.

"The market performance of the second quarter really matters," said Sang Yufeng, director of the development center of Century 21. "If property transactions stabilize and pick up in the second quarter, then the sluggish home sales in the first three months is just a short-term adjustment. Otherwise the pessimistic sentiment could persist throughout the whole of 2014."

Property developers' pricing strategy has also changed amid the falling number of transactions. Most of them are setting prices lower than market expectations to spur sales. Some have begun to offer discounts in cities including Hangzhou, Nanjing and Guangzhou.