Excess inventories expected to pare home prices
Updated: 2011-10-09 16:32
BEIJING-- Experts expect China's skyrocketing home prices to gradually ease, as housing inventories have begun to pile up as a result of slumping transactions in the property market.
Transactions have continued to fall following sluggish performance in September. The market even suffered a slide during the weeklong National Day holiday, which is typically a boom week for the housing market.
Official statistics showed that only 1,039 housing units were sold in Beijing during the holiday, including 908 new homes and 131 second-hand houses, down 22.8 percent over the same period last year.
Shanghai also saw a significant slump in home sales during the holiday. Daily housing sales in the city stood at about 100 units, while in the large cities of Guangzhou and Hangzhou, sales figures remained at only two digits.
According to statistics from Wind Information Co Ltd, a leading financial service provider in China, the inventories of 136 A-share listed real estate companies accounted for 61.82 percent of the companies' total assets in the first half of the year, while the ratio during the same period last year was below 60 percent.
Data from the National Bureau of Statistics showed that during the January-August period, the construction of new homes used up 1.02 billion square meters of land, while only 36.3 percent of those construction projects are finished, meaning that more houses will come to market and push up supply.
WorldUnion Property Consultancy Co Ltd predicted that housing inventories will come to a head at the end of this year or early next year.
Prices won't seriously change until supply reaches its peak while sales remain low, WorldUnion said.
The government has created a series of policies to curb the country's housing market, including purchase limits, higher down payments, the introduction of a property tax in some cities and the construction of low-income housing projects.
"Under the current policies, the immediate response in the market will be dwindling transactions in first- and second-tier cities. A slump in transactions is necessary for price drops to occur," said Hu Wei, deputy manager of the Langqin Real Estate Institute.
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