The growth in average prices for residential properties in China's mainland
will slow to below 5 percent over the next two years, while Shanghai's housing
prices are likely to drop further by 15 percent, an industry report forecast
Thursday.
As a result of the changes in the supply structure, average prices are
expected to exhibit a marked weakening or even a fall in the coming years, given
the increased weighting of smaller-sized and lower-priced sectors, said a report
by Citic Ka Wah Bank Limited.
The average housing price in 70 major cities across the mainland rose 6.1
percent from a year earlier in the first five months, led by cities such as
Dalian and Shenzhen that reported more than 10 percent growth, according to
government figures.
Shanghai's housing price dropped 6.2 percent in the first five months from
the same period of 2005.
At the end of May, the mainland introduced new tax, land and credit policies
to cool surging housing prices. It ordered that at least 70 percent of all new
residential property projects must be for homes with a floor area of less than
90 square meters.
"The expected changes brought by the regulation should be more pronounced in
larger cities where speculative activities are more prevalent and the proportion
of high-end properties is higher," said Liao Qun, chief economist and strategist
of China Banking at the bank.
The double-digit price rises in Beijing, Shenzhen and Guangzhou seen in the
past year should be curbed to single-digits. For other eastern cities such as
Dalian, Qingdao, Ningbo and Tianjin, residential property price rises are also
expected to slow to single digit, he added.
Some analysts attribute the surging housing prices to increasing overseas
investment in the mainland's property market and speculation has been mounting
over other possible government's measures.
The authorities will soon restrict foreigners and people from Hong Kong,
Macau or Taiwan from buying more than two properties on the mainland, China
Business News reported yesterday, citing an anonymous source familiar with the
potential policy.
The new policy will also forbid overseas buyers to sell the houses within a
certain period of time after purchase, the report said.
(For more biz stories, please visit Industry Updates)
