S&P sees China home prices falling this year

[SHANGHAI] China home prices will fall this year as developers cut prices to meet sales targets amid a cooling property market, Standard & Poor's said.

Home prices will fall 5 per cent this year compared with an 11.5 per cent gain in 2013, the New York-based ratings company said in a report yesterday. Sales volume will improve in the second half of the year and rise 10 per cent for the full year, boosted by price cuts, according to the report.

"Prices are likely to continue to slide because of large inventory in some markets," Hong Kong-based analysts, led by Bei Fu, wrote in the report. "Many small unrated developers will feel the heat the most because their sales and financing capacities are substantially weaker than their larger peers'. Some lower-tier cities with limited demand and abundant supply could see deeper downward price adjustments."