Home purchase demand seen dropping

China's property prices remain far from falling to a reasonable level, and efforts to curb real estate speculation must be maintained, economists warned Wednesday after a survey showed that people's willingness to buy houses in the next three months has slumped to a record low.

Among 20,000 urban depositors in 50 cities surveyed in the first quarter of the year by the People's Bank of China, the country's central bank, 14.1 percent said they were considering buying apartments in the next three months, on par with the previous quarter and the lowest since 1999.

"Though the government's property tightening policies are taking effect, the current housing prices are still not in line with China's personal income and investment level," Cai Jiming, director of the Center for Political Economy at Tsinghua University, told the Global Times Wednesday.

The survey also showed that 17.7 percent of the respondents expected the housing prices to rise in the second half of the year, a nearly three-year low.

"The near-term problem remains low affordability and a sizable mismatch in the type of supply and demand, with a glut in high-end property accompanied by a lack of affordable housing," Huang Weizai, president of Guangzhou-based real estate developer Star River Group, told the Global Times.

"The underlying structural demand for property, supported by continued urbanization, resilient income growth, and a high saving rate, is still alive," he said.

Meanwhile, the central bank has required commercial banks to put in place a differentiated credit policy to guarantee housing loans to qualified first-home buyers, in a bid to fix the supply and demand mismatch.

Commercial banks in first-tier Chinese cities on the coast and in resource-rich provinces, such as Shanghai and Guangzhou, are reportedly offering mortgage interest rate discounts of up to 15 percent for first-home buyers.

Chinese developers are also setting up property funds to diversify their sources of revenue as government real-estate curbs have led to a cash shortage.

"Raising money from the private sector opens up options for developers, but it's not a very attractive choice," Albert Lau, Shanghai-based China head and managing director at Savills Plc, was quoted by Bloomberg as saying Wednesday.

New home prices fell in 27 of 70 major cities last month compared to the year before and prices were unchanged in six cities, the biggest decline since the government began releasing individual data for the 70 cities in early 2011, the National Statistics Bureau said Sunday.