China’s skyrocketing home prices will likely see a slowdown in the third quarter but the property market is not expected to suffer a “hard landing”, according to a report published by the Renmin University of China in Beijing.
The report showed that more Chinese cities experienced lower price growth for commercial homes in the first half of the year, amid a series of cooling measures aimed at curbing the property market and lowering home prices.
“Some cities experienced a downward trend in property prices in the January-June period, though without a significant drop,” said the report.
According to the latest data from the National Bureau of Statistics (NBS), month-on-month price increases for new commercial homes were recorded in 50 major Chinese cities in May, compared to 56 cities in April. Prices of new homes in nine cities declined in the previous month and 27 cities posted small monthly increases, while prices in another 11 cities remained the same.
China has implemented a series of cooling measures to curb property prices, including charging property taxes in Shanghai and Chongqing, requiring higher down payments and restricting residents in 35 major cities from acquiring second homes.
Wang Jinbin, a leading economist at Renmin University of China, said that the country is now experiencing an oversupply of homes.
“The total stock of commercial homes in the first three months among the 136 listed property companies will perhaps require two years or even more to digest.”
For instance, the total supply of commercial homes in Beijing hit 101,912 as of 7 June, according to figures from a local housing agency.
Wang noted that fund shortages are becoming more prevalent for most property developers.
A report by the National Institute of Property Finance and Beijing Beta Consulting Center indicated that China’s first-tier cities will likely see a 30 percent drop in property prices, while second-tier cities will experience a decline of between 10 percent and 20 percent.
“An obvious price drop in the property market is expected to appear in the second quarter of next year when a large amount of government-subsidized houses will pour onto the market,” said Li Chang’an, a public policy professor at the University of International Business and Economics.
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