China says property prices fall in more cities

BEIJING – Home prices in most major Chinese cities fell in November from the previous month, official data showed Sunday, as government efforts to cool the red-hot property market prove effective.

The figures add to mounting evidence that the world’s second largest economy is slowing and will fuel pressure on Beijing to ease monetary and fiscal policy to prevent a painful hard landing.

The price of new homes in 49 of the 70 Chinese cities tracked by the government dropped in November from October, the National Bureau of Statistics said in a statement, up from 34 in October.

New home prices in another 16 cities were stable in November compared with 20 in the previous month, while only five cities saw prices rise on a monthly basis, down from 16 in October, the data showed.

Despite growing signs the Chinese economy is losing steam, top leaders have pledged to maintain restrictions on property purchases put in place in the past year to curb soaring prices.

The ruling Communist Party said last week it would maintain the measures such as bans on buying second homes in some cities and property taxes, in 2012 to bring prices back down to a “reasonable level”.

A surge in bank lending in recent years has fuelled investment in the real estate sector and pushed property prices out of the reach of many ordinary Chinese, angering people struggling to buy their first home.

But property developers have been hit hard by the policies and a lack of funds after the government hiked interest rates and restricted bank lending to rein in surging inflation and cool real estate prices.

So far the government has been reluctant to reopen the credit valves too quickly for fear of reigniting inflation, which hit a more than three year high of 6.5 percent in July and has the potential to trigger social unrest.

In November the central bank cut the reserve requirement ratio for banks to boost lending, but Beijing said last week it would maintain a “prudent monetary policy” next year, signalling it would move slowly to ease credit limits.