New-home prices continue to drop

HONG KONG: Prices of new homes in mainland cities continued declining last month as sales activity plunged, according to property consultant DTZ.

But the price drop was partly distorted by marketing strategies from developers who launched more new mass-market residential units, lowering the overall price level.

According to DTZ's survey of new home sales in the four so-called first-tier cities in May, the proportion of luxury units in the total dropped from 70% in April to 64%.

Luxury units are defined as prices over 20,000 yuan (RM9,540) per square metre in first-tier cities. In inland cities, luxury units are defined as prices over 4,000 yuan per square metre to prices over 8,000 yuan per square metre, subject to their economic growth, according to DTZ.

"Beijing recorded the biggest adjustment - from 100% in April to 63.4% - which explained the city's price correction of some 20.9% in the month," Alan Chiang Sheung-lai, head of the mainland residential department at DTZ, said.

More mass residential units would be released towards the second half, which would further reduce the overall price level, Chiang said.

In Shanghai and Shenzhen, new home prices remained reasonably steady according to Chiang, whereas Guangzhou prices had been distorted by the delayed input of data.

Average new-home prices in second-tier cities such as Chengdu, Chongqing and Hangzhou fell by 10.7%, he said. Declines in Tianjin and Xiamen were even steeper.

In first-tier cities, sales had dropped substantially - by 52% month on month in May, or 73% year on year, Chiang said. Were it not for the official figures for Guangzhou lagging behind, the adjustment would have been sharper, he said.

New-home sales in second-tier cities have also dropped, though more moderately, by 20% month on month last month, or 47% year on year. Current data show that sales remain slow this month, according to DTZ. -- South China Morning Post