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Sunday 27 September 2009
Mainland home prices expected to lose steam
Mainland housing prices have surged since March, but they will soon lose momentum and even start to fall around the end of the year, boding well for a more sustained contribution to overall economic growth.
Mainland housing prices have surged since March, but they will soon lose momentum and even start to fall around the end of the year, boding well for a more sustained contribution to overall economic growth.
A burst of lending in the first six months helped fuel a wave of pent-up end-user buying and speculative purchases, driving up prices for some projects in major cities by 20 to 30 per cent and creating concerns about dangerous bubbles.
Speculative transactions are subsiding, while a fresh round of property investments will increase supply.
The resulting moderation in prices, far from signalling the next phase of a boom-bust cycle, will probably pave the way for steadier demand from owner-occupiers, providing a valuable prop for an economy adjusting to a slump in exports, analysts said.
“First we see transactions fall, then prices will decline,” said Ge Haifeng, deputy head of data research at China Real Estate Index System, which is affiliated with SouFun.com, China’s biggest property website.
Transaction volumes in Beijing, for instance, fell 5.6 per cent last month from July, the second consecutive fall after a four-month streak of gains, according to the city’s housing management bureau. In Ningbo, they were down 37 per cent.
Worried by the jump in house prices, authorities in Beijing, Shanghai and other major cities attempted to curb speculation by introducing measures in July to make it harder to apply for second mortgages.
Such moves will increase the cost of buying a home and reduce prices, said Fan Jianjun, a senior researcher at the Development Research Centre, a government think tank.
The drop in new bank lending, to an average of 383 billion yuan (HK$434.78 billion) in July and August compared with a monthly average of more than 1.2 trillion yuan in the first half, will also pull down transactions in the coming months, said Gao Shanwen, the chief economist at Essence Securities.
Policy tweaks and slower lending will probably be enough for now, analysts said, allowing Beijing to stop short of declaring a full-fledged campaign to stamp out property speculation similar to the one in 2007.
Ge projected that housing prices would drop towards the end of the year, or early next year, by about 10 per cent, much less than a 20 to 30 per cent fall witnessed last year.
Song Li, a senior analyst at Centaline Property Research Centre in Shanghai, gave an even bolder forecast: “We expect prices to peak in September.”
Mainland home prices expected to lose steam
ReplyDeleteReuters in Beijing
25 September 2009
Mainland housing prices have surged since March, but they will soon lose momentum and even start to fall around the end of the year, boding well for a more sustained contribution to overall economic growth.
A burst of lending in the first six months helped fuel a wave of pent-up end-user buying and speculative purchases, driving up prices for some projects in major cities by 20 to 30 per cent and creating concerns about dangerous bubbles.
Speculative transactions are subsiding, while a fresh round of property investments will increase supply.
The resulting moderation in prices, far from signalling the next phase of a boom-bust cycle, will probably pave the way for steadier demand from owner-occupiers, providing a valuable prop for an economy adjusting to a slump in exports, analysts said.
“First we see transactions fall, then prices will decline,” said Ge Haifeng, deputy head of data research at China Real Estate Index System, which is affiliated with SouFun.com, China’s biggest property website.
Transaction volumes in Beijing, for instance, fell 5.6 per cent last month from July, the second consecutive fall after a four-month streak of gains, according to the city’s housing management bureau. In Ningbo, they were down 37 per cent.
Worried by the jump in house prices, authorities in Beijing, Shanghai and other major cities attempted to curb speculation by introducing measures in July to make it harder to apply for second mortgages.
Such moves will increase the cost of buying a home and reduce prices, said Fan Jianjun, a senior researcher at the Development Research Centre, a government think tank.
The drop in new bank lending, to an average of 383 billion yuan (HK$434.78 billion) in July and August compared with a monthly average of more than 1.2 trillion yuan in the first half, will also pull down transactions in the coming months, said Gao Shanwen, the chief economist at Essence Securities.
Policy tweaks and slower lending will probably be enough for now, analysts said, allowing Beijing to stop short of declaring a full-fledged campaign to stamp out property speculation similar to the one in 2007.
Ge projected that housing prices would drop towards the end of the year, or early next year, by about 10 per cent, much less than a 20 to 30 per cent fall witnessed last year.
Song Li, a senior analyst at Centaline Property Research Centre in Shanghai, gave an even bolder forecast: “We expect prices to peak in September.”