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Chinese housing prices set to drop

MAY . 31 2011

Peking University, May 30, 2011: China’s house prices could drop by as much as 15 percent, according to speakers at a Real Estate summit on the development of Chinese property, held by Peking University’s Guanghua School of Management (GSM).


A housing estate of the upper class in Beijing


“This year’s situation is totally different from last year’s,” said Nie Meisheng, chairman of the China Commercial Real Estate Commission (CCREC).


Last year, housing prices stablized in July, then rebounded in August with prices in Beijing, Shanghai, Guangzhou and Shenzhen rising by 20 percent, according to the People’s Daily Online .


Nie believes that this year’s regulatory policies have transformed from monetary to administrative ones.


“Last year’s policy continued the moderately easy monetary policy. According to our survey, what is happening now is what happened in 2008, which saw control over CPI as the top priority,” she added.


The director of the Real Estate Research Center at Beijing Normal University Dong Fan also believes that housing prices could decline in the second half by 10 to 15 percent.


Qin Hong, deputy director of the policy study department of the Ministry of Housing and Urban-Rural Development, contends that in the conditions of China’s current property market, efforts to boost the market supply are still needed.


She pointed out that the current problem of housing shortages and soaring prices are basically the result of three factors.


The first is the trend of urbanization and subsequent increase in urban population. Secondly, the high rate of demolitions and reconstruction has resulted in only 20 percent of the new buildings filling the gap left behind by the old buildings. Third, people who used to live in small houses are now demanding larger ones, which has led to the precipitation of housing accumulation funds.


In order to solve the problem, Qin thinks the government should encourage the developers to build rental houses.


Edited by: Arthars

Source: Property Report