Housing prices level off, drop expected after Oct

09:10, August 11, 2010      

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July housing price did not budge a bit from their June level, and analysts predict the prices will go down in the next two months due to strong regulatory signals and developers' mounting funding pressure.

The July housing prices in 70 large and medium-sized cities did not move from the June level although they rose 10.3 percent from a year earlier, according to the National Bureau of Statistics data released Tuesday.

The floor space of sold houses in July declined 15.4 percent from the same period last year.

A majority of developers still have space for funding right now, so they are in no hurry to price down to sell more, only few companies have offered discounts, said Liu Yuan, an analyst with Centaline China Property Research in Shanghai.

The country's banking regulator has asked banks to stop lending to third-home buyers in major cities and conduct pressure tests under conditions that housing price were to drop 50 to 60 percent last week following a series of regulations released in April.

"The government is serious this time," said Liu of Centaline, "and it wants to keep up the regulatory pressure."

Time itself would drive the price down, said Pan Wei, a housing researcher with Beijing-based Galaxy Securities, in a report released Tuesday.

Housing sales have dropped dramatically since April as most buyers are waiting and expect a price decline.

Only a few developers have offered 5 to 10 percent discount in major cities. A big part of the homes sold in major cities, such as Shanghai and Beijing, were sold at discounts, according to Centaline.

However, the deadlock could be broken in the third quarter as new housing projects are to be completed and developers have to get rid of inventory to relieve funding pressure, said Pan in the report.

Liu of Centaline predicted that housing price would drop 10 to 15 percent through September and October.

Source: Global Times


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