China home prices continue declines in May

BEIJING - New home prices in nearly two-thirds of China's major cities fell again in May from a month earlier as the country continued its campaign to regulate the real estate market.

In May, 43 cities out of a statistical pool of 70 major cities saw drops in new home prices from April, while new home prices in 21 cities remained the same, the National Bureau of Statistics (NBS) said Monday.

Six cities, up from three in April, saw slight increases of less than 0.2 percent in new home prices last month, the NBS noted.

The sale prices of newly constructed residential buildings fell in 55 cities out of 70 in May, expanding from 46 in April this year. Fifteen cities saw sale prices increase by less than 1.4 percent year on year in May, compared with 23 cities in April.

Housing price falls in May indicated the country's policies to curb property speculation are having the desired effects, said Xie Yifeng, head of the Asia-pacific Urban Real Estate Association.

Property developers' price cuts to boost sales amid the market curbs also contributed to the price falls, Xie added.

However, Zhang Dawei, a chief analyst with Centaline Property, noted an emerging sign that the country's property market is approaching the bottom of its decline as the effects of the government's curbs are wearing thin with transactions starting to pick up and the range of price falls narrowing.

A gauge tracking property shares in Shanghai bourse edged up 0.9 percent after the release of May's price data.

The Ministry of Housing and Urban-rural Development reiterated on Monday that the country will steadfastly continue with its property market regulation policies, which have so far included higher down-payments, property tax trials and the construction of low-income housing.

The country's central bank and the China Banking Regulatory Commission both clarified last week that they had made no changes on the home lending policies and risk-weighting for individual mortgage loans.

However, there are growing concerns that, if China's housing prices fall too much and too soon, it may hurt the country's overall economic growth.

The fall in China's home prices comes as its economic growth has been slowing, prompting its central bank to cut benchmark interest rates for the first time since December 2008 on June 7.

The world's second-largest economy expanded at an annual rate of 8.1 percent in the first quarter of 2012, the slowest pace in almost three years.

It is scheduled to release its second-quarter gross domestic product (GDP) data on July 13. The China International Capital Corp forecast the country's GDP growth will continue easing, growing by 7.3 percent in the second quarter from one year earlier.