Home prices in China fell for the fourth straight month in August as demand for properties continued to slide.
According to the latest data by China's National Bureau Statistics, prices fell in 68 of the 70 major cities monitored by the agency by 1.1 percent in August, accounting for a 0.89 percent month-over-month fall. The decline was 0.47 percent in July and the current rate shows that the slump is picking up pace.
A week ago, a few individual agency reports noted that prices fell in August, but stressed that the pace of the fall was slower. The government report seems to contradict that.
The Bureau noted that while big cities like Beijing and Shanghai witnessed price drops, the smaller cities were the ones that were hit harder. New home prices dropped the most in Hangzhou, falling by 2 percent. Prices dropped in 19 cities when compared on a year-over-year basis, according to Bloomberg.
China is heading faster towards a possible housing market crash and the government is doing its best to make a soft landing. Previously, the administration had levied stringent rules on home purchases and increased stamp duty on real estate investments to throttle the rising prices. That left the country with excess supply and waning demand.
The government's easing measures, which include easier lending standards, more access to mortgages, cutting down payments and lifting regulations on the number of properties one owns, is helping lower prices now. The demand, however, isn't seem to be picking up as much.
Experts expect more regulation easing from the administration.
"It's quite likely the government will roll out targeted rate cuts, such as lowering mortgage rates for first-time home buyers, in the last quarter," Larry Hu, analyst at Macquarie Group, told the Wall Street Journal.
Some predict home prices to fall further in the coming few months.
"Home prices are likely to drop further in coming months as developers need to offer deeper price cuts to attract home buyers to enter the market," Lin Bo, vice-head of research at China Real Estate Information Corp, a property intelligence firm in Shanghai told Reuters.
"Compared to a year ago, we expect prices to go negative by the end of this year or earlier next year," Bo added.
The government of China is unfazed about the falling prices and is calling it a minor fluctuation.
"The government will not be distracted by short-term fluctuations of individual indicators." Premier Li Keqiang said at the Summer Davos forum last week, according to Xinhua.
"We have focused more on structural adjustment and other long-term problems," he asserted.
