News Analysis: More property price cuts expected

SHANGHAI, Feb. 29 (Xinhua) -- Continued policy tightening, sagging sales and a looming cash flow crisis are likely to push Chinese property developers to slash their prices further.

Earlier this month, Poly Real Estate, the country's second-largest developer by market value, lowered prices for one of its projects in Shanghai by 2,000 yuan (317.56 U.S. dollars) per square meter.

The move was immediately joined by many other big developers, including China Merchants, Vanke, China Resources and Greenland.

With the government repeatedly making clear its tightening stance, analysts expected the move to lead to another wave of price cuts nationwide.

The municipal government of Shanghai on Tuesday issued a notice to reiterate its stance on property price control, dousing previous market expectations of policy softening.

The notice, which further specified the city's home-purchase limit policies, overruled a statement made by its housing authorities a week ago that a non-Shanghai registered family can buy a second home if it had obtained residence permits for no less than three years.

The act, together with recent two call-offs on a bailout plan in eastern city of Wuhu and a similar policy in southern city of Foshan, showed the government's determination in steering the market to back to normalcy.

"The move will further suppress sales, promoting developers and used-home sellers to make deeper price cuts," said Shi Hongrui, managing director with Shanghai Hanyu Property.

In January, home prices in the 70 major Chinese cities monitored by the National Bureau of Statistics all ceased rising as a result of the government's persistent cooling measures.