China’s residential property prices need a 30 percent decline to achieve a ‘reasonable’ level, according to He Keng, a deputy director of the Financial and Economic Affairs Committee of the National People’s Congress.
Property prices will be at a ‘reasonable’ level when they are equivalent to around six years of salary for a family. “Based on this, property prices may need to fall 30 percent,” said the senior lawmaker.
“But it doesn’t mean prices will go down in every region, every city. The exact extent of the decline will depend on demand,” he added.
This year, the central government reiterated that it will continue to implement the housing curbs including the tighter mortgage requirements. To date, Beijing and Shanghai are among the cities still imposing home purchase restrictions.
The country’s residential property prices had their worst performance in December 2011, with only two out of the 70 cities tracked by the government recording gains, based on figures from the National Statistics Bureau.
Daiwa Securities Capital Markets said home transactions in China are expected to decrease 10 percent this year, while UBS AG said curbs may increase home supply to its highest in a decade.
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