New home prices in China declined in half of the cities monitored by authorities as oversupply and a declining economy weighed on the sales.
Prices declined in 35 out of 70 cities surveyed in May from April, reported the National Bureau of Statistics on Wednesday, the first time since May 2012. Prices in Shanghai declined 0.3 percent from April, ending a two-year run of increases. The prices also slid 0.2 percent in the southern city of Shenzhen
“The property market obviously is worsening,” Yao Wei, a China economist at Societe Generale SA in Hong Kong, told Bloomberg. “The tricky thing is that the further developers cut prices, the scarier buyers may feel. They are holding a wait-and-see position for further discounts.”
Hangzhou city saw prices drop the most in May, after the prices fell 1.4 percent from April. In the industrial city of Guangzhou, the prices remained slightly unchanged, while in Beijing, they rose 0.2 percent.
The slowdown in the property market, which contributes to a fifth of China’s gross domestic product, may weigh on economic growth. Last week, the statistics bureau reported that home sales plunged 11 percent in May from a year ago, while data from private firms showed that the property market is slowing down.
China’s largest real estate website SouFun Holdings Ltd reported that prices declined for the first time last month since June 2012. Last year, the prices surged 10.5 percent, the fastest in three years.
Prices of new homes in first-tier cities declined from a year ago, surging 8.7 percent in Shenzhen and 9.5 percent in Guangzhou, the weakest advances since February 2013. In Shanghai, the prices rose 9.6 percent, the slowest since April last year; and rose 7.7 percent in Beijing, the least since March 2013. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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