Chinese household sentiment on home prices dips in third quarter - survey

[September 29, 2014]  BEIJING (Reuters) - Sentiment on home prices in China fell in the third quarter from the same period a year ago as the property market weakened, a private survey of households showed on Monday, suggesting that a housing downturn may persist for some time yet.

An index of expectations on home price fell to 100.6 in the third quarter from 102.6 between April and June, the survey by the China Household Finance and Survey Centre (CHFS) showed.

The centre is a unit of China's Southwestern University of Finance and Economics.

The decline suggested that potential home buyers had turned more pessimistic on the housing market, which has softened this year as sales slowed and banks became increasingly cautious about lending to developers and investors.

As a sector that affects around 40 other industries in China and accounts for around 15 percent of the economy, the housing market is of increasing concern to companies and policymakers as it drags on growth.
 

"China's housing market faces a tough situation," the CHFS said.

"Recent moves by local governments have not had an obvious impact on households," it said, referring to the scrapping of home purchase restrictions by nearly 90 percent of governments that previously had such limits in place.

Forty of 46 regional governments, which earn a large part of their revenue from selling state land, have tried to support the market by removing restrictions on the number of homes that any one person can buy.
Yet the survey showed that households that own multiple homes expected prices to fall in coming months. The home price index fell to 93.3 in the third quarter. Readings below 100 mean more respondents expect a drop in prices than an increase.

However, the Chinese public seems to have become more optimistic about the stock market. An index measuring expectations for shares jumped to 111.5 in the third quarter from 92.2 in the second.

The stock market in Shanghai closed at its highest level in nearly 19 months on Monday.

The survey, which is conducted every quarter, polled over 5,000 households selected from 28,000 families across the country.

(Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Alan Raybould)

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