‘Slow­ing growth ahead’ for prop­erty prices

China Daily (Hong Kong) - - BUSINESS - By HU YUANYUAN in Shen­zhen huyuanyuan@chi­nadaily.com.cn

Prop­erty price growth is set to de­cel­er­ate, with the slow­down to per­sist for sev­eral years, in­dus­try ex­perts said on Fri­day.

“China’s hous­ing prices are now ap­proach­ing a peak, just as what hap­pened to the United States in 2005,” said Nie Meisheng, for­mer head of the China Real Es­tate Cham­ber of Com­merce.

She made the com­ment at the Ping An Real Es­tate and Fi­nan­cial In­no­va­tion fo­rum in Shen­zhen.

Av­er­age hous­ing prices in 100 ma­jor cities mon­i­tored by the China In­dex Academy rose 0.68 per­cent month-on-month to 10,758 yuan ($ 1,707) per square me­ter in Novem­ber, the 18th con­sec­u­tive in­crease since June 2012.

The growth rate, how­ever, was at the low­est level this year, the academy said.

“It doesn’t make sense that home prices will con­tinue to go up while over­all eco­nomic growth is slow­ing down,” said Nie.

China’s GDP will prob­a­bly ex­pand 7.7 per­cent this year, ac­cord­ing to Robin Bew, man­ag­ing di­rec­tor of the Econ­o­mist In­tel­li­gence Unit, a Lon­don­based think tank.

How­ever, he’s fore­cast­ing that GDP growth is likely to slow to 5 per­cent over the next decade, even if the coun­try suc­cess­fully car­ries out its re­forms.

“Bub­bles do ex­ist in some cities, es­pe­cially in some sec­ondtier cities with too much sup­ply, but the over­all mar­ket hasn’t seen a big bub­ble yet,” said Nie.

Ac­cord­ing to Qin Hong, di­rec­tor of the pol­icy re­search center at the Min­istry of Hous­ing and Ur­ban-Ru­ral De­vel­op­ment, the record high prop­erty sales of 2013 are un­sus­tain­able.

Qin said that those sales have been fu­eled by China’s baby boom gen­er­a­tion, born in the 1980s.

“Prop­erty sales will slow to a sin­gle-digit growth rate in the fu­ture,” said Qin.

For Louis Bai, chief ex­ec­u­tive of­fi­cer of the Bei­jing of­fice of Bar­ratt Homes, a large United King­dom prop­erty com­pany, Chi­nese de­vel­op­ers need a new strat­egy to cope with mar­ket un­cer­tain­ties.

Do­mes­tic de­vel­op­ers’ over­seas in­vest­ment is also on track to set a record high in 2013 of more than 25 bil­lion yuan, ac­cord­ing to Nie.

How­ever, Frank Chen, ex­ec­u­tive di­rec­tor of real es­tate con­sul­tancy CBRE Re­search China, warned: “As real es­tate is a very lo­cal in­dus­try, the risks for Chi­nese de­vel­op­ers’ over­seas ex­pan­sion should not be un­der­es­ti­mated.”

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