China home sales mixed, but prices falling in all cities

SHANGHAI: New home sales in China cities were mixed last month with Beijing and Tianjin recording a significant rise. But overall prices declined in July and a further drop is expected in the coming months, according to property consultant DTZ.

Beijing and Tianjin recorded month-on-month sales rises of 38.9% and 24.6%, respectively, the DTZ data showed.

However, Guangzhou, Chengdu, Xiamen and Changsha saw sales fall between 20% and 28.6%, it said.

New home sales for first-tier cities -Beijing, Shanghai, Guangzhou and Shenzhen — in July dropped 27.6% compared with average sales in the first half of the year.

Average prices for first-tier cities fell 5.8% month on month last month. Prices in second-tier cities fell 6.6%, DTZ said.

With rising new supply particularly for mass residential units ahead in coming months, a further price correction can be expected, said Alan Chiang of DTZ.

Chiang said leading local governments such as Beijing and Shanghai have reaffirmed the temporary ban on mortgage loans for third- home purchases.

China banks were cautious in granting developers loans in the second quarter, with loans totalling 289.9 billion yuan (RM135.06 billion) approved for the period, down 21% quarter on quarter. Personal home loans fell 25.3% month on month to 59.3 billion yuan.

But Chiang did not expect any major new policies to be introduced in the near future.

Knight Frank also expected the existing tightening measures would be maintained.

Knight Frank said only mild home price corrections are expected in key cities in China. Beijing is likely to see a further home price decline of up to 10% in the second half of the year, given the tight supply in the housing market. However, prices in Shanghai are likely to dive an additional 15%, with prices in the outer ring facing greater downward pressure.

In Guangzhou and Shenzhen, average home prices are expected to dip another 10%, Knight Frank said. — South China Morning Post
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