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Housing rebound points to recovery
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Property sales in major Chinese cities saw strong rebound in April, a sign that the market was well on the way to recovery, analysts said.

According to data from China Real Estate Index, the country's largest property research institution, 18,533 apartments, with a total floor space of 2,106,069 sq m, were sold in Beijing in April, compared with 15,034 apartments of 1,685,158 sq m floor space in March.

In Shanghai, apartment sales increased by 8 percent in April compared to the previous month.

Property transactions in Nanjing and Hangzhou also experienced an increase, but those in Shenzhen, Tianjin and Wuhan saw a minor drop.

The fear of inflation is gaining ground due to the government's loosening monetary policy, and consumers think real estate is the perfect hedge against inflation, a DTZ report pointed out.

Grant Ji, Director, Savills (Beijing), said the big rebound in property sales during March and April this year was due to the accumulation of demand in 2008.

"As most people adopted a wait-and-watch attitude in 2008, their pent-up demand became evident in the first quarter, along with the falling price of real estate," said Ji.

However, he did not think such a high volume of transactions would be sustainable in the second quarter.

"So far, I haven't seen clear signs of a warm up in the purchase of property for improvement and investment," Ji said.

In fact, the existing favorable policies, such as lower down-payment and mortgage interest rates, are all tailored to meet the requirements of property buying by individual families. The government still restricts the purchase of the second apartment.

The ongoing de-inventory, said Ji, was largely attributed to a more "reasonable" price after the market adjustment.

"As the economic fundamentals have not seen any big change at home and abroad, any big price hike will kill the rebound," said Ji. "The property price will probably stabilize in the following two quarters, and the real recovery may come in the fourth quarter."

Though China's mass residential market is showing signs of a pick-up, foreign institutional investors remain quite cautious.

"After the financial crisis, most foreign investors placed risk control on top of the agenda. Their original 'high-leverage' mode does not work now," said Ji.

(China Daily May 5, 2009)

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