Efforts taken by the Chinese government in order to try and cool down its red hot real estate markets seem to be taking effect, according to the latest findings from SouFun Holdings, who say price increases in July slowed down to their lowest rate in more than 11 months.
The firm’s latest report on Chinese real estate showed that the average prices for residential homes rose by just 0.2% last month when compared to June, the slowest rise since August of 2010. However, residential real estate prices still rose in 66 out of the 100 cities the website tracked, showing that much work remains to be done.
Altogether, the company found that residential home prices increased to an average of $1,378 per square meter, rising by 6.8% from this time last year.
Just last month, China’s Communist Party leaders said that they will expand their efforts to rein in real estate prices across the country’s smaller cities, following the lead taken in Shanghai and Beijing, where limits have been set on the number of home purchases allowed. The intensified restrictions were brought about in response to the number of real estate transactions growing by a staggering 31% in June, even despite mortgage payments in the country being increased.
“The property market in China is gradually cooling down, but it’s just not that apparent,” said China International Capital’s Peter Bai Hongwei. “It’s going to take time, what with high levels of inflation and investment currently.”
Amongst the cities surveyed by SouFun Holdings, Yichang saw the strongest growth in property prices, gaining 1.9% in just one month, while the largest price drop was recorded in Suquian, where home values declined by 2%. Shanghai and Beijing property prices rose by 0.4% and 0.1% respectively.
The slowdown is seen by some experts as a sure sign that China’s property bubble is sure to burst soon enough. “It’s headed for a huge bust,” claimed Puru Saxena of the Hong Kong based Puru Saxena Wealth Management company.
“I am thinking that over the next one-and-a-half to two years, we will see Chinese real estate prices declining significantly,” he said.