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Property growth likely to slow
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Homebuyers stand to gain from recent government policy moves, according to the China Index Academy (CIA).


"The growth of apartment prices in China is set to fall in 2008 because of an expected increase in supply and a drop in speculative activities," said Chen Sheng, deputy director of the CIA, which tracks property prices.


"Land supply is the key factor in deciding housing prices. The cities in Central China have enough land reserves to build low-cost housing under the new policy, but Shanghai needs to take measures to buy back land sold earlier to real estate developers," Chen said.


Zhao Qiang, an analyst at Everbright Securities Co Ltd, said the real estate market is slowing, but next year depends on factors like credit risk and the impact of government tightening policies.


"Property prices are not expected to go up too quickly because the expectation of short supply this year has already been fully discounted in the market," Zhao said.


Jolly Zhou, senior vice-president of Lehman Brothers Asia Ltd, agreed. Zhou said average housing prices in China are expected to stay at the current level until pre-owned apartments come on the market.


"The tax on pre-owned apartment trading has depressed speculative activities as well as genuine demand," said Zhou.


But experts remain upbeat on the growth of the real estate market next year due to an expected inflow of capital and strong economic growth.


"The US subprime crisis is expected to trigger fund inflows from developed countries to China," Zhou said.


"The present decline in housing sales is a natural market adjustment to ensure sustainable and healthy growth," said Zhou Lu, research manager at BOC International (China) Ltd.


"Developers are expected to adopt a more rational pricing scheme, which will lead to an increase in real demand, which, in turn, will help to stabilize the market in the second half of the year," Zhou said.


(China Daily December 21, 2007)

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