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Beijing's Housing Prices to Decline: Experts
Beijing's overall house prices will be stable or could drop a little in coming years, experts have predicted.
"There is still room for an adjustment in Beijing's relatively higher housing prices," said Huang Yu, an official with the Beijing-based Soufun.com Academy, which researches China's real estate industry.
As institutional buyers gradually withdraw from the capital city's housing market because of the country's housing reform, real estate developers will have to study how much money an ordinary resident can afford, Huang said.
The World Bank suggests that rational housing prices should be three to six times a family's annual income.
In Beijing, average house price has rocketed to about 6,000 yuan£šUS$720£© per square metre, according to statistics from Beijing Achievement Commerce Investment Consultants Co Ltd, a local real estate consultant.
"The price of a housing unit of 60 square metres is more than 20 times a family's annual income," said Li Xueyan, an official with the local company.
An earlier survey by the Beijing Municipal Statistics Bureau on 1,500 households suggests that more than 76 per cent of local people would buy homes with prices of less than 4,000 yuan £šUS$480£© per square metre.
"Although Beijing's successful bid to host the 2008 Olympic Games will attract a certain amount of people from outside of Beijing to buy homes in the capital city, local residents will be the mainstream of the city's housing market," Li said.
On the other hand, the supply of housing will surge because of to the Games and China's impending accession to the World Trade Organization, both Li and Huang agreed.
Reliable sources said Beijing is expected to build 28 million square metres of housing on the sites of old and dangerous housing areas in the coming several years.
The city is also expected to build 7 million square metres of housing on the sites of polluting factories which will be moved out of the city. The green belt which will be built along the Fourth Ring Road will witness an additional supply of 30 million square metres.
"The fierce competition, as well as the supply of low-cost economy housing and second-hand housing, will hold back the city's overall housing prices," Huang said.
Huang disagreed with some real estate developers, who said Beijing's housing prices will rise because the Beijing municipal government will invest 180 billion yuan £šUS$21.7 billion£© to improve the city's infrastructure for the 2008 Olympic Games.
Housing prices in the Asian Games Village areas, where the infrastructure has been improving year after year, did not show any signs of rising because of fierce market competition, Huang said.
"Beijing's housing prices, which are abnormally high, will have to drop to a reasonable level," she said.
Xie Jiajin, director of the Department of Housing and Real Estate under the Ministry of Construction, said abnormally high housing prices would harm the enthusiasm of residents' home purchasing and the country's real estate industry.
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