Property market continues to cool as summer slack sets in

Construction workers clean a newly completed property project in Qingdao, Shandong province. [Photo by Yu Fangping/China Daily]

China's buoyant property market showed further signs of cooling down, according to official data which were released on Friday.

Data published by the National Bureau of Statistics showed that the pace of price growth of new homes in 15 key cities across China continued to slow in July, and second and third-tier cities showed a clear decline in price growth.

Liu Jianwei, senior statistician at the NBS, said that looking at the overall picture, home prices in first-tier cities were stable, while price growth in lower-tier cities slowed down obviously in July.

"Home price growth in the 15 key cities narrowed by somewhere between 0.8 and 4.9 percentage points year-on-year," Liu said, interpreting the NBS research which monitors home prices in 70 cities on a monthly basis.

On a month-on-month examination, 10 of the 15 key cities experienced new home prices dropping, or maintained prices at the same level as that in June. Five cities experienced slight growth, at no more than 0.4 percent month-on-month, Liu added.

On average, in first-tier cities new home prices were at the same level in July as in June, and pre-owned home prices dropped some 0.1 percent month-on-month. In second-tier cities, new home prices rose some 0.4 percent month-on-month in July, slower than the 0.6 percent record in June.

In third-tier cities, new home prices rose 0.6 percent month-on-month in July－versus the 0.9 percent record growth in June. Pre-owned home prices rose 0.4 percent, against the 0.7 percent record gain in June.

Beijing－China's biggest residential property market－experienced home price declines for two consecutive months, the first time for the capital in the past 12 months.

Transaction volumes also went down in some key cities, including Beijing and Shanghai. For example, 7,158 units in pre-owned residential properties in Beijing were transacted in July, a 20 percent month-on-month decrease and 70 percent year-on-year decline, and the lowest level in the past 36 months.

"Summer is often the slack season for property transactions, so this seasonal factor also contributed to the lower transactions", said Zhang Dawei, an analyst with Centaline Property in Beijing.

"But if transactions continue to drop, average prices are likely to drop too," Zhang added.

Yan Yuejin, research director with E-house China R&D, said that transaction volumes would gradually impact the overall price trend.

"More cities are likely to experience average price declines in the last months of the year," he said.