Property prices may pick up again in the second quarter because of the slump in the stock market and the rising CPI, said a report by the National Development and Reform Commission (NDRC).
"Property prices, after a period of adjustment, are likely to maintain a moderate growth in the second quarter," said the report, adding the transaction volume will also climb. The major reason, the report said, is the weak sentiment in the stock market, few investment choices and rising inflation.
The CPI was up 8.3 percent in March, following an 8.7 percent rise in February, making bank deposits less attractive. The benchmark Shanghai Composite Index has plummeted over 40 percent this year.
"I've noticed a capital flow from stocks to property in the past few months, particularly in Shanghai," said David Hand, managing director of Jones Lang LaSalle's Beijing office.
Property development costs grew rapidly in the first quarter. Price of residential lands in the first three months jumped 21.7 percent, much higher than the same period of last year, said the NDRC report.
"Though transactions in the first quarter saw a big drop, we see no signs of an obvious fall in property prices, especially in Beijing and Shanghai," said Eric Chan, deputy managing director of the Beijing branch of Savills, a UK real estate service provider.
Source: China Daily