Home prices in China, the second largest economy of the world, fell for the fourth consecutive month in August; but the pace of decline was slower this month, a few individual surveys revealed.
New home prices in 288 Chinese cities declined 0.6 percent in August on a month-over-month basis, according to data provided by the China Real Estate Index System, The Wall Street Journal reports. Of the 100 cities polled, 74 cities reflected a decline in home prices.
Another survey by E-House China Holdings Ltd shows that home prices slumped 0.3 percent in the 288 cities analyzed.
However, the surveys note that the pace of price decreases slowed down in August when compared to May, June and July. Prices declined 0.3 percent in May, 0.5 percent in June and 0.8 percent in July.
"The property market was in a downtrend in August," CREIS, a consultancy linked to Soufun Holdings - China's largest data provider - was quoted by Reuters. They expect the trend to continue.
"With the peak season for supply coming in September and October, developers' promotions and more reasonable prices will attract home buyers to enter the market," CREIS added.
The fall in prices is a result of the government stimulus. Previously, the administration had levied stringent rules on home purchases and increased stamp duty on real estate investments to throttle the rising prices. However, that left the country with excess supply and a weaning demand.
However, of late, the government has been loosening curbs to help boost demand and enhance property purchases. Some incremental mortgage rate cuts were also introduced in big cities.
"Property developers stepped up sales promotions and some cities scrapped purchase restrictions to stimulate demand, thus transactions rebounded in the short-term," CIA, the research unit of Soufun, was quoted by China Post.
The news of the decelerating pace of home prices comes amid fears of a harsh market crash. Real estate accounts for about 13 percent of the total Gross Domestic Product; and while experts have welcomed the price slowdown, they are still skeptical of a full rebound.
"The country's housing market is still undergoing a correction at the moment with most cities registering smaller price drops compared to a month earlier," The China Index Academy explained, according to Shanghai Daily.
"Meanwhile, the relaxation of home purchase restrictions in some second- and third-tier cities will somewhat help boost short-term sales while the arrival of September and October, which are the traditional high season for property purchase in China, might also lead to some seasonal rebound in transaction," the academy added.
