Tight credit for developers, buyers keeps lid on home prices

Potential homebuyers inspect models of residential property at an expo in Henan province. [Photo by Geng Guoqing / Asianewsphoto]

Property prices in 100 major cities are stabilizing, with month-on-month gains continuing to ease, the China Index Academy said on Tuesday.

The average price increased 0.38 percent to 11,002 yuan ($1,774) per square meter in March, the 22nd month in a row of gains. But the increase was 0.16 percentage point less than in February. Prices rose in 63 cities.

The gain was more than 1 percent in 12 cities, compared with 20 in February, the organization said. The academy is a research arm of SouFun Holdings Ltd, a real estate portal.

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The average price in the top 10 cities, including Beijing and Shanghai, was 19,563 yuan per sq m, up 0.67 percent from February and up 16.43 percent year-on-year.

The month-on-month gain for new units was largest in Shanghai (0.99 percent), but even there, the increase was 0.12 percentage point less than in the previous month.

Guangzhou, one of the country's four first-tier cities, experienced a decline of 0.29 percent. The decrease was 0.18 percent in Hangzhou.

As credit for property developers and prospective buyers remains tight, concerns are intensifying over price declines. More developers are keeping prices flat for new projects, rather than asking for increases compared with previous developments, and some are even cutting prices, the academy said.

Buyers remained cautious in March, keeping transaction volume low in what's usually a strong month for sales.

According to HomeLink, a real estate brokerage, 10,651 units of housing (excluding subsidized apartments) were sold from Jan 1 to March 26, down 58 percent year-on-year.

Zhang Xu, an analyst with HomeLink's market research department, said the drop reflected both tight credit and a surge in the supply of subsidized housing.

The government plans to launch 50,000 units of subsidized housing this year.

huyuanyuan@chinadaily.com.cn