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China's Property Prices to Keep Trend of Declining
Mar 21,2012 09:59CST
data analysis
Source:SMM
China's National Bureau of Statistics (NBS) announced Sunday 45 cities out of the statistical pool of 70 major cities saw drops in new home prices from January.

BEIJING, March 19 (Xinhuanet) -- China's National Bureau of Statistics (NBS) announced Sunday 45 cities out of the statistical pool of 70 major cities saw drops in new home prices from January, while other 21 cities saw no changes as a result of government persistent cooling efforts.

Experts believe that within the period of government's control, the housing prices in China will keep the trend of declining.

China started adopting measures to calm property prices in 2010, including tight credits, higher downpayments, a ban on third-home purchases, property tax trials and the construction of low-income housing.

People are concerned about how long those measures will be taken, since the housing market concerns fiscal, financial, and land policies of the government as well as the interests of businesses.

Premier Wen Jiabao said recently at a press conference after the conclusion of China's annual parliamentary session that the country will not slacken its efforts in regulating housing prices, which he considered still "far from a reasonable level."

"If we develop the housing market blindly, a bubble will emerge in the housing sector. When the bubble bursts, not only the housing market will be affected, it will weigh on the entire Chinese economy," said Wen.

The reasonable housing prices should match the people's income, the construction cost, and profit should be reasonable too, added Wen, stressing a long-term, steady and sound development of China's property market.

"We have set the target of providing adequate living space for the people, but this does not mean that each one has to own a home," said Wen. "We will continue to encourage people to rent houses."

He added that the regulations in recent years have paid off, as the government has a very firm resolve, and has been able to curb speculative and investment driven demand with focused measures.

Nevertheless, the NBS data also showed that four cities of the 70 still saw gains in new home prices over the January-February period. This has triggered concern among some people.

But many market participants believe that the price rebound in this small number of cities is brought about by the release of a rigid demand in the real estate market in February, and is also related to measures adopted by some local governments, encouraging the purchase of home-for-own-use. Logically the price rebound doesn’t mean a housing market pick up and invites no unneccessary worries.

Li Daokui, an adviser to China's central bank, said earlier that 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 is shared by many experts. As long as the government's cooling efforts continue, China's property prices will stay calmed.

Related:

Home prices fall in a third of key cities

BEIJING, March 19 (Xinhuanet) -- More than a third of major cities saw property prices fall in February, on a yearly basis, and analysts said the trend will continue amid government curbs.

Of the 70 large and mid-sized cities tracked by the government, 27 saw new home prices fall year-on-year, compared with 15 cities in January, the National Bureau of Statistics (NBS) said on Sunday. Full story

Property market correction continues

BEIJING, March 18 (Xinhua) -- New home prices fell in most of China's major cities in February as the market corrects in part due to government polices aimed to dispel speculation.

In February, new home prices dropped in 45 cities of the 70 major Chinese cities monitored by the National Bureau of Statistics (NBS), and 21 cities recorded no changes month-on-month.
 

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