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Chinese housing market sees turning point soon?

11-07-2011 10:15 BJT

By Tang Danlu

BEIJING,Nov. 7 (Xinhuanet) – The continued tightening measures of the government and the poor autumn sales volume have forced Chinese property developers to drop housing prices nationwide, which indicates that the market is moving closer to a turning point.

Visitors check information of houses during an autumn real estate fair in Tianjin
Municipality, north China, Oct. 29, 2011. A total of 92 exhibitors attended the fair which
kicked off on Saturday, presenting a variety of buildings with an area of 19.9 million
square meters. (Xinhua/Wang Huan)

Official statistics shows that the housing inventory in China’s first-tier cities is increasing, which is a desired downward trend for private homebuyers.

In September, 59 of a statistical pool of 70 major cities saw new home prices increase more slowly from a year earlier, compared with 40 cities in August, the NBS said in a report on its website.

According to the Centaline Property Agency, a supply of 9,152 new homes in October has added Beijing's total housing supply to 118,000 units, a new high since June 2009.

It would take 22 months to consume the inventory even if there were no new supply, said the agency.

The gloomy sales in September and October will weigh heavily on developers, as they will have to pay back banks, cover construction expenses and pay for employee bonuses during the last two months of the year, said Chen Guoqiang, vice chairman of the China Real Estate Society.

"The central government's decision to maintain the property policies is conducive to guiding market expectations and will accelerate the arrival of a drop in housing prices," Chen stressed, adding that embattled by rising debts and weak sales, developers will likely drop their prices even further to secure more sales.

UNPRECEDENTED PRESSURE ON DEVELOPERS

The plunge in transactions and fund constraints are pushing real estate companies to take action to court more buyers.

China Vanke, the country's largest real estate developer by market value, led the wave of sales by lowering prices of their housing projects in Beijing and south China’s Guangdong Province starting from this month.

Treading the heel of Vanke, other leading property firms, such as Agile Property, Capital Group, Evergrande and R&F Property, all reported to have cut price to reduce inventories and boost sales volumes.

However, the cut of home price has just begun. Market analysts are expecting lower price as declining sales and increasing inventory are putting more strains on property firms, especially those small and medium-sized developers.

Zhang Dawei, analyst from the Centaline Property Agency, said the first-tier cities have come very close to the housing price turning point.


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