BEIJING, Mar. 11 -- Li Daokui, an adviser to China's central bank, said Wednesday he expected housing prices to decline definitely this year, but a collapse in the property market is not likely.
Li's view on the real estate market came at a press conference at which the country's political advisors were invited to share their perspectives on the government-subsidized housing market.
"In general, there must be declines in housing prices this year. That is for sure," Li said when asked about the outlook for the previously runaway realty market. "But I don't think there will be a price crash as many people had expected."
Li, who is a member of the Monetary Policy Committee of the People's Bank of China, the central bank, said a collapse in the housing market was not the intended result of the country's tightening policies.
"A massive property price crash as deep as 60 or 70 percent will undoubtedly be a major setback to the entire economy," said Li, who is also a member of the country's top political advisory body.
Housing prices in China continued to fall in January as the government remains determined to stabilize the real estate market.
In January, 48 cities out of a statistical pool of 70 major cities saw declines in new home prices from December of last year, while new home prices in 22 cities remained unchanged, according to the National Bureau of Statistics (NBS).
None of the 70 cities reported increase in new home prices in January, the NBS said. The bureau will release price data for February later this week.
Chinese Premier Wen Jiabao vowed in his work report to the parliament's annual session Monday that the government will continue to regulate the real estate market and develop low-income housing, particularly discouraging speculative or investment-driven housing demand.
"We will bring property prices down to a reasonable level," the premier said in the report.
The central bank adviser said he believed housing transactions would rebound in many areas, especially in big cities, this year following price declines.
"As people continue to flock to big cities, many young migrants will choose to buy a home there and such demand will remain solid," Li said.
He added that, in some second- and third-tier cities, housing vacancies have reached appalling levels, calling for early preparation for capital restructuring among developers in part of those cities.
He said solutions should not be expected within this year for problems that only accumulated over the course of the past decade.
"I believe the tightening of the realty sector this year will be part of the macro control efforts to be continued for several years to come in the future," he added.