China’s real estate inflation eased in November, the seventh straight month of decrease following the series of cooling measures announced by the government.
However, property investment stayed buoyant, relieving fears that tightening moves would seriously harm the real estate sector and the broader economy.
Real estate prices climbed 7.7 percent in November from the previous year, down from the 8.6 percent increase in October. The downward trend began in May.
“The government measures are working, otherwise, property prices might have risen much faster,” said Wang Xiao, an analyst at CCB International in Beijing.
The National Bureau of Statistics said real estate investment jumped 36.7 percent last month from the previous year, down from 37 percent in October.
Industry analysts said developers will continue pouring money into building at a rapid rate, irrespective of expectations of additional tightening steps.
Liu Liyong, research head of the China Real Estate Information Corp, said real estate investment might slow down in 2011 but would still keep a heady rate of more than 30 percent.
“Developers’ cash flow will not tighten too much because banks are still willing to lend to them,” said Mr. Liu. “Monetary tightening will not suffocate developers, but only make them a bit breathless.”
Despite warnings from the banking regulator, Chinese lenders and trust firms continue to channel their money to property developers, as such loans offer generous interest margins and they believe that property assets will stay safe, said analysts.
Thus, investors’ concerns that tightening measures could result in a crash in the property market have eased.
The Chinese Academy of Social Sciences said real estate prices would probably decline slightly next year as authorities stay committed to keeping speculators out of the market.