Chinese regions depending on exports see biggest property falls

Property markets in China which are dependent on exports are struggling the most in the global financial downturn, according to analysts.

A comparison of housing price indexes in four of the country's most-populous urban areas: Shanghai, Beijing, Guangzhou and Shenzhen shows that Guangzhou and Shenzhen, both key port zones close to Hong Kong, have experienced the biggest relative declines since September 2006.

'Real estate prices in export-driven areas show there is no decoupling between the global crunch and the local economy,' said Samson Chan, deputy managing director of Stanley & Partners Investment Management Co., a Shanghai-based property consulting company.

'Many manufacturers and developers, who geared up a few years ago, are struggling to find customers and financing,' he added. It is in the Pearl River Delta in the south near Hong Kong which is most affected.

Among manufacturers in the Pearl River Delta, there are more private companies relative to state-owned enterprises than in cities such as Shanghai and Beijing and it is the private developers who are having a tougher time getting funding.

The latest data from the National Development and Reform Commission shows that property prices in China rose 3.5% in September from a year earlier, the slowest pace in at least three years, as declining economic growth and a slumping stock market deterred homebuyers.

New home prices fell 5.2% in Guangzhou and 10.8% in nearby Shenzhen, the biggest decline nationwide, the government data shows.

This month Credit Suisse Group revised its 2009 property price forecast for China, saying it expects declines of 15% in Guangzhou, Shenzhen, Chengdu and Beijing and 10% in other major cities.

Mortgage-rate cuts and fee reductions last month by the government to boost demand is not making much difference, its analysts said in a report.