BEIJING, May 11 -- A real estate law expert from Jones Day said Friday that home prices in Beijing and other big cities in China still have further room to decline.
Ashley Howlett, a partner of the U.S.-based firm, told Xinhua that the government's affordable housing projects and high housing inventories might exert further downward pressure on home prices in some big cities.
The government last November unveiled a 4-trillion-yuan (585 billion U.S. dollars), two-year economic stimulus plan, with 400 billion yuan to be channeled into affordable housing projects across the country.
The government has pledged that 7.5 million affordable homes will be provided in cities, and 2.4 million in rural districts, reclamation areas, and coal-mining regions by the end of 2011. This year alone, 2.6 million urban and 800,000 rural homes would be built.
Figures from the Ministry of Housing and Urban-Rural Development showed that the commercial housing inventory across the country was 164 million square meters at the end of 2008, up 21.8 percent year on year.
Howlett said that although housing sales were picking up, boosted by mortgage interest cuts and easing home prices in recent months, homes in Beijing and other big cities still were over-priced compared with local residents' income and international standards.
The National Bureau of Statistics reported that private-sector housing sales rose 8.2 percent year on year in 70 large and mid-sized cities in the first quarter, with the average price down1.3 percent per square meters year on year in March.
The Beijing Academy of Social Sciences said in an April report that urban home supplies had exceeded what local resident could afford, which resulted in 10.44 million square meters unsold in Beijing alone, accounting for 34.04 percent of the total.
Data from China Index Academy, a private-sector research institute that specializes in real estate, showed that it would take about 20 months to clear the backlog in Beijing.
Howlett added that the global downturn had reduced property prices in the United States, the United Kingdom, Spain and other countries much more than in China, which made those markets more attractive to international institutional investors.
Cao Jianhai, a researcher with the Chinese Academy of Social Sciences, a central government think tank, predicted last month that Chinese urban home prices would probably drop by 40 percent to 50 percent over the next two years, as the high apartment inventory level, the economic slowdown and slower-growing incomes were keeping the lid on urban home prices.