Curbs cool home prices in hot seasonChina’s property market remained stable during the traditional hot season, indicating that the effects of housing curbs have gradually surfaced. National home prices in Golden September dropped another 4% m-o-m to RMB 5,458 per sq m, following a 2.8% decline in August. According to official data released earlier, 31 tracked cities, out of 70, reported rises in home prices in September, versus 35 cities in August. Prices fell in 22 cities, and 17 cities remained unchanged. Home sales, led by strong sales in second- and third-tier cities such as Chongqing, Kunming and Xian, grew by one-fourth during the month to about 98 million sq m.

In first-tier cities, home sales saw a 2.7% growth in September, totaling about 4 million residential floor space sold. In which, Beijing led the gain with a nearly 20% monthly increase, while that in Shanghai reported a 1.9% m-o-m rise. In Guangzhou, home sales also went up by 6%, with its average home prices dropped 0.54% to about RMB 12,382 per sq m.

Despite the slowing home prices, the markets still have a large number of prospective homebuyers adopting wait-and-see approach, as the current price level is still beyond reach for many people. Some home buyers expect the Government might roll out more measures later this year to bring down the home prices, which jumped more than 10% from a year ago. However, facing the economic slowdown, the Government might not have much room for further tightening measures. Due to the weak export and investment growth, World Bank in October lowered its forecast for China’s GDP growth rate this year from 8.2% to 7.7%. Some economists even expect the Government to launch new stimulus package to bolster the weakening investment activity after the new leadership takes office at November’s Party Congress.

Premier Wen Jiabao in a meeting with industry leaders said that the effects of housing curbs are still very preliminary and the Government will unswervingly continue to implement those housing measures. As long as the market remains stable, we believe the Government would stick to the existing housing policies, and wait to assess their impacts on the market before taking any further action.