Property prices in China set to halve
PROPERTY PRICES in China are likely to halve over the next two years, a top government researcher has said, in a strong sign that the country’s economic downturn faces further challenges despite recent positive data.
The property market and exports were leading drivers of the booming Chinese economy over the past decade and the slumps in both have taken a heavy toll.
Cao Jianhai, professor at the Chinese Academy of Social Sciences, said an apparent rebound in the property market was unsustainable over the medium term and driven by a flood of liquidity and fraudulent activity rather than real demand.
He said he expected average urban residential property prices to fall by 40 to 50 per cent over the next two years from their levels at the end of 2008. “Prices may not fall in the near term but I expect a collapse starting next year, followed by many years of stagnation,” said Mr Cao, known as one of the “three swordsmen” of the real estate market because of his influence as an official economist.
Average urban housing prices across 70 cities in China fell 1.3 per cent in March from a year earlier but were up 0.2 per cent from February, according to figures released yesterday by the National Bureau of Statistics.
That broke seven months of sequential declines and was accompanied by a rebound in transaction volumes. Residential property sales rose 8.7 per cent from a year earlier in the first quarter compared with a fall of 20.3 per cent for the whole of 2008. – (Copyright The Financial Times Limited 2009)