A BIG DROP IN CHINA’S PROPERTY?

CHINA’S REAL ESTATE SPIRALS DOWNWARD

Gao Zitan

The Epoch Times, March 8, 2012

China’s real estate (RE) market is in a downward spiral. A big drop of 30-50 percent this year is not impossible, according to a Chinese economist.

According to data presented by China’s National Bureau of Statistics in January 2012, the overall price of RE in China’s 70 largest and mid-sized cities has dropped four months in a row.

“With the central Communist Party continuing its control policy, and local governments’ attempt of loosening control, where is China’s real estate market heading, and why are prices dropping?” The Epoch Times asked Dr. Jian Tianlun, a former employee at People’s Bank of China and currently an economist in the U.S.

Jian said China’s real estate market has shown clear signs of change since last October. Home prices in more and more cities are dropping. Looking at January’s figures, 48 out of the 70 largest and mid-sized cities have experienced price drops, 22 have remained the same. Overall, RE prices keep dropping, Jian said.

Actually, the change in China’s RE market began much earlier, he said. Sales began decreasing in the middle of last year. It’s just that prices did not drop much at that time. If we trace further back, land prices started declining one or two years prior to the housing decline.

Predicting the near future of China’s RE market, Jian said, most people believe it will continue to drop. How much prices will drop this year may vary significantly in different parts of the country. Overall, Jian predicted a drop of 10-20 percent, with certain places possibly remaining stable and other places doing worse.

“A big drop of 30-50 percent is not impossible,” Jian said.

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