The forecast is also based on the expectation that the government will take measures to control the growth rate of the economy as a whole, taking into account a context in which the Chinese economy grew at the high rate of 11.1 percent in the first quarter. This is bound to initiate a moderate slow-down of real estate investment in the second quarter, among other things.

In sum, the forces working against real estate investment growth are on the ascendancy, while those working in favor of increasing investment are playing out.

Why?

First, the housing purchasing power is weakening, the number of house deals struck are declining, more potential apartment buyers adopt a wait-and-see attitude and more high-end apartments are sitting unsold, which was rarely seen before.

All this indicates that short-term demand is weakening. Or, in other words, the demand is being put off to mid and long terms.

In addition, the proportion of low-priced and low-rent apartments is increasing. This is expected to change the orientation of choice of some homebuyers and, in turn, water down short-term demand.

Also, the central government is expected to strengthen its efforts nationwide to see that macroeconomic readjustment policies are actually carried out. The effects will be felt in the second quarter and second half of the year. As a result, tax evasion, irregularities in land transfers, behind-the-scene price manipulation and cheating are expected to decrease.

In addition, investors and speculators are expected to sell the housing they are holding. This, in turn, is expected to increase the supply of second-hand apartments. So, demand for newly constructed houses will become weaker in the second quarter and in the latter half of the year.

Finally, round after round of real-estate price hikes since 2003 have served to separate housing prices from actual value. The degree of bubble inflation and its endurance have both reached their limits. Now, it is time for the price to make a downward turn.

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