Housing prices in China will continue to increase next year due to a stronger inflationary expectations and the surge in bank lending, said the government’s top think tank yesterday.
But the property market may flow back slightly and become stable in the second half of next year, after the country implements its tighter monetary policy, said Ni Pengfei, a researcher from the Chinese Academy of Social Sciences (CASS).
“Our judgment is that property prices will keep rising in 2010, but that there will be some volatility,” he said during a press conference to launch the CASS annual housing market report.
The lending activity of several banks would be on full display in the early part of next year, with the monetary policy still relatively loose, giving enough cash for property purchases, said Mr. Ni.
On top of it, the rising inflation expectations would trigger Chinese investors to pour down cash in assets, especially in property that would benefit from the rising price levels, he added.
Housing prices in the country’s 70 biggest cities increased by 3.9 percent in October compared to last year, the fastest rate of property inflation since September 2008.
While China’s long-term urbanization program supported the property market, the affordability of its housing projects remained a big concern for ordinary Chinese. Local media has also debated whether the current housing prices, at a high level in some markets, were suitable.
Last year, Beijing introduced several policies to aid the real estate market, from reducing mortgage rates and down payments to making it easier for residents to sell their houses.
"The increase in bank lending, not the policies given by the government, was the main factor for the recovery in the real estate market," said Mr. Ni.
But he noted that Beijing must keep its property stimulus policies to ensure it benefited ordinary citizens who try to acquire homes, and not the speculators who are looking for a quick profit.