China Home Prices Still Sliding

Empty homes in Kangbashi, China. Photo: Globaltimes.cn

(Bloomberg BusinessWeek) China’s home prices fell for a fourth month in December as the government prolonged a crackdown on speculation that risks deepening the slowdown in the world’s second-biggest economy.

Property values dropped 0.25 percent from November, SouFun Holdings Ltd., the nation’s biggest real-estate website owner, said today. Prices slid in 60 of 100 cities, and all of the 10 biggest, including Beijing and Shanghai.

Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed, in a statement released yesterday. Barclays Capital and Bank of America Merrill Lynch say lenders’ reserve requirements may be cut before a weeklong Chinese New Year holiday starts on Jan. 23.

“China’s economy is still on a downtrend and the next reserve ratio cut may come as early as this week,” said Kevin Lai, a Hong Kong-based economist at Daiwa Capital Markets. “More liquidity is needed in running up to the Chinese New Year holiday and to provide funds for companies that may face more difficulties in coming months.”

Asian stocks rallied on the first full trading day of the new year after U.S manufacturing rose at the fastest pace in six months. The MSCI Asia Pacific Index advanced 1.2 percent as of 1:05 p.m. in Tokyo. In China, the Shanghai Composite Index fell 0.2 percent as of the 11:30 a.m. local time break in trading.

Italy, Germany

Across Asia, economic reports will include Thailand’s inflation. In Hong Kong yesterday, the Retail Management Association said that while retailers reported buoyant Christmas sales, spending by visitors from China on expensive goods such as watches and jewelry has slowed.

In Europe today, a purchasing managers’ index may show services in December contracted for a seventh straight month in Italy, according to the median estimate of economists surveyed by Bloomberg.

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