Hard landing in property market unlikely in wake of cooling measures, analysts say

Home price increases in key cities may ease after a series of cooling measures take effect, while a hard landing of the market is unlikely, analysts say.

New home prices in 63 out of 70 cities monitored by the National Bureau of Statistics gained in September. But the real estate market "apparently cooled" in October after cities took measures to curb rapidly rising prices, according to a statement by the NBS on Oct 21.

Liu Jianwei, spokesman for the bureau, says growth in residential property prices that was too rapid in first-tier cities and some second-tier cities has apparently been curbed, and is stabilizing. Compared with September, new-home price growth has slowed in October.

Year-on-year growth in floor area under construction also slowed, from 4.6 percent in August to 3.2 percent in September.

Shenzhen, one of the cities with the fastest price growth, saw average new home prices decline from September by 0.3 percent in the first half of October.

Prices in some other cities dropped between 1 percent and 3.8 percent, the NBS statement said.

More than 20 cities launched cooling measures, including stricter regulations on buyers' qualifications for a second or third home and a tightening of credit requirements, in a bid to curb speculation.

However, analysts say they believe a hard landing in the key cities' property markets is unlikely.

"Policy changes will remain gradual and focused on upper-tier markets, meaning that a property market crash is highly doubtful," says Sam Xie, head of CBRE China Research.

Wang Tao, chief China economist at UBS Group AG, says in a research note that the chances of a home-price plunge are low.

"These curbs only aim to rein in the home-buying panic and to stem the bubble, instead of being an all-around shackling of the property market," Wang writes.

James McDonald, a Savills China researcher, says lower-tier cities may see decreasing prices due to inventory pressure.

Price increases in first-tier cities such as Beijing and Shanghai will slow but are unlikely to end if the land supply does not pick up quickly, he says.

Average home prices in Wenzhou, Zhejiang province, dropped by 3.62 percent, from 18,093 yuan ($2,670; 2,453 euros; 2,196) per square meter in September to 17,438 yuan in the first half of October.

In Harbin, capital of Heilongjiang province, home prices dropped by 1.23 percent, from 7,837 yuan per square meter in September to 7,740 yuan in October, according to data from housing authorities.

In Shanghai, the average home price went up by 3.41 percent month-on-month in the first half of October to 49,644 yuan per square meter.

wuyiyao@chinadaily.com.cn