Property prices to drop 20 percent in China

Sunday, November 21, 2010

BEIJING - Property prices in China are likely to drop by almost 20 percent starting March due to a slew of cooling measures adopted by the government on the real estate market, a report said.

The cooling measures, which led to financial difficulties of the developers, and monetary policy adjustment, will drag down property prices in China, the Beijing-based Renmin University of China (RUC) said.

The capital of developers is expected to sharply contract in the first quarter next year, which will be exacerbated by a peak season of bank loan repayment of developers, stricter restrictions on property buyers, and a more difficult situation for developers’ bill financing, Xinhua reported Sunday quoting Liu Yuanchun, deputy dean of RUC School of Economics.

Liu ruled out a steep correction in the country’s property market, saying that tight financial situation will not cause a sharp price plunge and the market is expected to realize a soft landing.

Property prices in 70 major Chinese cities rose 8.6 percent year on year in October, easing for six consecutive months from the peak in April at 12.8 percent, data from the National Bureau of Statistics showed.

The government has introduced a raft of measures to crack down on property speculation and rein in home prices since April, including suspending mortgage loans for third home purchases and raising down-payments.

Filed under: Economy

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