Approximately half of the estimated 20,000 commercial real estate firms in China may be out of business in the next three to five years, as the central government tightens housing market policies, according to Yifan Hu, Chief Economist and Head of Research at Haitong International Research Ltd.
In July, the government reined in residential prices in smaller cities by increasing down-payment requirements and mortgage rates.
“The government will continue tightening housing policy. They’re very concerned about the impact on slowing economic growth, so part of the solution will be to increase the supply and provide public housing,” said Hu.
Property company stocks depreciated last month amid concerns that sales volume would deteriorate.
China’s second largest developer by sales, Evergrande Real Estate Group Ltd and Agile Property Holdings Ltd, a hotel and apartment builder, saw its sales slide more than 49 percent last month.
SouFun Holdings Ltd, China’s biggest real-estate website which monitors 20 cities, noted that property transactions in September fell 13 percent from August.
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