Property prices in China will likely drop next year, as the central government remains committed to curb speculation in the property market by tightening monetary policies, according to a top government think-tank.
Property developers are expected to reduce prices in the first quarter next year to boost sales, said the Chinese Academy of Social Sciences (CASS) in a report.
However, increasing pent-up demand and policy relaxation by local governments may drive-up prices in the third quarter, which will trigger a new wave of tightening measures, it said.
“Speculative demand has been curbed and the shift in China’s monetary stance will further limit loans to developers and mortgage borrowers next year,” said Ni Pengfei, the main author of the CASS report.
Mr. Ni added that China should set targets annually for property price hikes, similar to GDP growth and consumer inflation.
His team recommended aiming for a 25 percent increase in property investments next year, as well as a 5 percent change in property prices, either an increase or a decrease.