Signs for housing price decline emerging

13:49, May 12, 2010      

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Property prices in 70 of China's large and medium-sized cities rose nearly 13 percent in April from a year earlier, according to a report on China's real estate market between January and April 2010 released by the National Bureau of Statistics (NBS) on May 11. This was the 11th consecutive increase and the biggest since statistics began in 2005.

Meanwhile, both the floor space of houses sold and sales volume have dropped, and the national real estate prosperity index also fell for the first time after having risen for 12 consecutive months. Insiders said that although property prices are likely to keep rising compared with the previous year, more and more people have chosen a wait-and-see approach given the decline in floor space and sales volume from March to April.

"Property prices in the 70 cities only increased just over 1 percent from March to April, an increase of 0.3 percentage points in the growth rate for March. This mainly reflects that prices in the first half of April had strong momentum for growth, and the government's control policies unveiled in mid-April still need time to produce effects," said Yang Hongxu, director of the Comprehensive Research Department under the E-house China R&D Institute.

Data from the NBS showed that in the period between January and April of 2010, the floor space of houses sold nationwide rose nearly 33 percent to 234 million square meters from last year, an increase of 3 percentage points in the growth rate of the January-March period. Meanwhile, property sales rose more than 55 percent to over 1.2 trillion yuan from last year, a decrease of 2.3 percentage points in the growth rate of the January-March period. "The floor space of houses sold nationwide in April 2010 totaled nearly 80.4 million square meters, which exceeded that in April 2009 and the monthly average of nearly 78.1 million square meters in 2009, but it is almost the same as that in March 2010. Property sales are likely to drop in May under the government's control policies," Yang said.

Moreover, real estate companies will no longer enjoy as much development capital as before. In this year's January-April period, the development capital of real estate companies rose nearly 60 percent to nearly 2.2 trillion yuan from a year earlier, a decline of 1.5 percentage points in the growth rate of the January-March period. "Because the government has taken a series of measures to curb the speculative demand and bank lending to real estate companies, the companies' capital witnessed the largest increase in the January-December period and rose slower and slower afterwards. They will probably experience fund shortages to certain degree in the second half of 2010, and sell increasingly more houses at reduced prices," Yang concluded.

By People's Daily Online


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