No crisis in price drop

0 Comment(s)Print E-mail Shanghai Daily, November 9, 2011
Adjust font size:

China's property prices may decline by up to 30 percent next year, but it should not lead to a systemic crisis or collapse, an industry report said yesterday.

"The current tightening policies on property may be adjusted if the average price decline approaches 20 percent," Barclays Capital said in a report. "Households are not likely to be forced to sell, while large developers could survive the downturn. But small developers will probably suffer from a significant financial stress."

Past property booms in China were supported by strong income growth, steady urbanization, favorable demography, limited investment alternatives and healthy household balance sheets, the report said. However, these factors may turn negative in the coming years, generating huge risks of a bubble bursting.

China's housing bubble has already reached extraordinary levels according to conventional measures such as affordability, vacancy and rental yields, the report said.

Barclays Capital's projection was made after Premier Wen Jiabao told Chinese diplomats and business executives on Sunday during a visit to Russia that curbing real estate prices is the Chinese government's firm policy.

"Our target is for prices to return to reasonable levels," Wen said.

Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from