Prices fell an average of 0.18% from December to RMB8,793 per square meter in the major cities across the country. In September, prices dropped for the first time in a year. From then to the end of 2011, prices fell by between 0.03% and 0.28%.
The data comes after Chinese Premier Wen Jiabao reiterated the government's tough stance on the real estate market. He said that the government must continue with macroeconomic controls, consolidate its property tightening campaign and bring about a reasonable correction in housing prices.
China Real Estate Index System said the survey of property developers and real estate agencies has been widely followed since China scrapped a national property price index in February last year.
Property prices in 60 cities fell in January compared with the previous month, whereas 39 cities posted a rise. Compared with a year earlier, the average price of a new home in January climbed 1.71%, slower than December's 2.86% rise.
Home prices in Shanghai edged down 0.09% on a monthly basis, while home prices in Beijing fell 0.26%. However, in year on year terms, average home prices of China's 100 cities rose 1.71% in January, it added.
Analysts said that prices will continue to contract in the coming months. ‘Prices won't rebound as long as the tightening policies remain in place, though sometimes there appear to be mixed signals regarding the government's implementation of the property curbs, which would confuse the market,’ said Song Huiyong, research director of Shanghai Centaline Property.
Over the past two years, China has implemented a series of measures to curb property speculation. These include raising interest rates and imposing limits on house purchases to make homes more affordable and to head off potential social instability.
Home sales and prices in major cities have subsequently fallen, although this has put pressure on cash strapped property developers and on local governments that depend on land sales for revenue.
Chinese banks also extended fewer loans to property developers and home buyers in 2011, issuing 38% fewer loans in 2011 compared with 2010, according to data from the central bank. Loans to the real estate sector accounted for 17.5% of total new loans in 2011, compared to 2010's 26.9%.
Meanwhile, Hong Kong's Financial Secretary has said in his budget speech that Hong Kong's housing land supply in aggregate during 2012/13 will provide about 30,000 private residential flats, up from 20,000 during 2011/2012.
The major sources of land supply include the government's Land Sale Programne, four property projects along the West Rail and three property projects owned by the Mass Transit Railway.
The government will continue to increase land supply in the coming year, such as including 47 residential sites on the Application List, of which half are new sites. He said those sites could provide about 13,500 units.
