Home price falls to continue
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China Daily, January 10, 2012
Property prices in China will continue to decline in the first half of the year before gradually stabilizing in the second, and real estate investment will plummet, industry analysts said on Monday.
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A property fair on Jan 1 in Haikou city, Hainan province, attracts a lot of potential consumers. Industry insiders say the value of property sales and prices will come under huge pressure this year, but a sharp decline is unlikely.[Xinhua] |
"The economic slowdown, increased capital pressure on property developers and the growing supply in the market all point to a further fall in home prices this year, especially in the first six months," said Yue Sen, a researcher with REICO, a research institution affiliated with China Real Estate Chamber of Commerce.
Liu Xiaoguang, chairman of Beijing Capital Land Ltd, said the value of property sales and prices will both come under huge pressure this year, but a sharp decline is unlikely.
"The real estate market will feel a real chill during the March-April period," said Liu.
According to the China Enterprises Development Report released by the State Council's Development Research Center, the market will undergo a fundamental change this year.
"With more economically affordable and low-rent homes entering the market, government-subsidized housing will dominate half of the market, helping to cool prices," said the report.
The government's ongoing tightening measures, including a rise in the level of downpayments and restrictions on the number of homes a family can purchase, have begun to bite.
The average price of properties in the country's 100 biggest cities continued to decline in December, sliding 0.25 percent from November, according to the China Index Academy, a Beijing-based real estate research institution.
December was the fourth consecutive month in which the average home price weakened across the country. Of the 100 cities monitored, 60 saw a month-on-month drop in prices.
For Zhou Xiaochuan, the governor of the People's Bank of China, the central bank, the risk of mortgage default is under control at present, given the size and proportion of home loans in terms of overall lending.
"However, we should also be aware of relevant potential risks arising from small enterprises, because they usually use their property as collateral for loans," said Zhou in an interview with Xinhua News Agency on Sunday. "As property prices decline, the size of mortgages will also drop, affecting overall bank lending."
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