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People's Daily Online>>China Business >> Macro-Economy

China's property market predicts soft landing amid dropping housing prices, rising rent


09:59, December 10, 2011

BEIJING, Nov. 9 (Xinhua) -- China's housing market is expected to achieve a soft landing due to the effects that emerged from the government's strict house-buying limits, according to a think tank's report released Friday.

The Annual Report on Development of Housing Market in China (2010-2011), released by the Chinese Academy of Social Sciences, said the dramatic rising trend of housing prices had been curbed preliminarily, with falls in both housing prices and sales.

On the basis of consolidating the current regulative achievement, China will keep a generally strict housing policy, while small adjustments are expected to be made in some areas to "meet certain conditions," in order to realize the soft landing of the housing market, said the report.

In October, 34 cities in a statistical pool of 70 major cities saw declines in new home prices from September, compared with 17 in September, according to data from the National Bureau of Statistics.

Generally, the fall of both housing prices and sales will continue from 2011 to 2012, the report said.

Housing prices in China have tended to be reasonable, with the prices in first-tier cities such as Beijing and Shanghai flat during the past year, and even mid-sized and small cities' prices, which had experienced a wild climbing from the end of 2010 to the second quarter of this year, began declining.

After developing in a "golden age" over more than 10 years, China's housing market has felt unprecedented shock, according to the report.

The report held that the "double falling" condition will lead to the capital tightening of real estate developers and the slowing of further investment that may compel developers to recycle funds by selling stored houses at lower prices.

To "digest" the stored houses and expand sale volume, a big wave of promotion and price-cutting in the housing markets is expected.

On the contrary, the cost to rent a house has been soaring nationwide. From January to June in 2010, the housing rental index went up by 4 percent, and it has increased another 1 percent since the beginning of the third quarter.

Tenants, especially recent graduates, face significant pressure, it said.

The report said the government's stop-buy order became a way for owners to increase rent. And another reason for rental increases is because house buyers are waiting to see consistency and stability in state policy.

When the government works out regulations and control policies, it will guarantee the stability and durability of its policies, the report suggested.

The report also said China's regulations and control policies on the housing market clearly emphasize people's livelihoods, with housing construction for low-income residents in full swing across the country.

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elee at 2011-12-10183.39.47.*
Yes, China needs to attend to its poorer folks first and foremost since the nation"s economy is being the strongest in the world right now; whilst it certainly needs the strength of investors and wealthier or more successful individuals to participate in the real estate environment as a way to hedge money or saving for their futures. This sector alone is accountable for at least 30% growth factor of any national GDP! To shut it down artificially or curbing it too tightly is NOT a bright idea no matter what others in different environments think and say so for most of them are NOT inside China long enough to know personally or to argue reasonably well.

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