Photo taken on Nov. 13, 2011 shows buildings on construction in Qionghai, south China`s Hainan Province. (Xinhua/Meng Zhongde)
BEIJING, Nov. 18 (Xinhua) -- More Chinese cities posted monthly home price declines in October following the government`s campaign to calm the runaway property market.
In October, 34 cities in a statistical pool of 70 major cities saw declines in new home prices from September, compared with 17 in September, the National Bureau of Statistics (NBS) said Friday.
New home prices in 20 cities stayed flat last month from September, and the growth rates of home prices in the other cities were all below 0.2 percent, according to an NBS statement on its website.
On a year-on-year basis, two cities -- Wenzhou and Ningbo in eastern China`s Zhejiang Province -- out of the 70, saw prices decline in October, compared with one in September. Gains of new home prices eased in 59 cities, the statement said.
Prices of new homes in the four top cities, including Beijing, Shanghai, Guangzhou and Shenzhen, saw month-on-month price drops after staying unchanged for three months.
Prices of existing homes fell in 38 cities in October, an increase of 13 cities from September, while those in 19 cities stayed flat, according to the statement.
Since April 2010, China has imposed a raft of measures aiming to calm property prices. They include higher down payments, limits on the number of houses that people can own, the introduction of a property tax in some cities and the construction of low-income housing.
NBS spokesman Sheng Laiyun said last month that the government`s efforts had achieved positive results.
China`s property sector is about to experience a large correction for the first time because of government curbs, Ba Shusong, an economist with the Development Research Center under China`s State Council, said in a report released Tuesday. A reshuffle among developers is inevitable, he said.
One way to handle the market adjustment will be price cuts, he said, adding that he expects home prices to fall by 20 to 30 percent in first-tier cities and 10 to 20 percent in second-tier cities.
Sales data from the country`s leading property developers has confirmed that the government`s cooling measures are taking effect. China Vanke, China`s largest listed developer, reported a 17.3-percent month-on-month decrease in its October sales and a 33.3 percent decline from a year ago.
Poly Real Estate Group, China`s second largest listed developer, saw a 19.5-percent month-on-month drop in sales and a 39.2 percent year-on-year dip in October.
Analysts said sales will probably continue to shrink due to purchase limits and monetary tightening measures, which will force developers to cut prices in exchange for more sales.
Average housing prices in October fell for the first time this year, indicating that a price stalemate that lingered during the second half of the year has been broken, said Zhang Yue, an analyst with Beijing-based Homelink Property. "A turning point for downward correction has come," Zhang said.
Home prices will continue to drop on a monthly basis over the following six months, said Yang Hongxu, an analyst with the Shanghai-based E-house China Research and Development Institute.
Most developers` stocks fell after the release of the October data. China Vanke retreated 2.88 percent to 7.09 yuan (1.1 U.S. dollars) at close, and Poly Real Estate Group lost 2.99 percent to 9.08 yuan.
Zhang Dawei, an analyst with Beijing-based Centraline Property, warned of possible policy loosening by local governments. "Currently, property controls are at their most crucial stage," he said.
During a visit to Russia last week, Premier Wen Jiabao reiterated that the government will not waiver on its tightening measures and pledged to bring prices down to a reasonable level.
To gear the property market toward healthy development, China has also begun construction on affordable housing units, aiming to build 36 million subsidized housing units by 2015. China`s housing authorities announced last week that they have already met this year`s construction goal.