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Will China's housing market hit the iceberg?

By Song Jingli (chinadaily.com.cn) Updated: 2014-06-17 09:56

With People's Daily joining in, discussions on whether China's real estate market will collapse are much more heated than any actual momentum in the market.

China's property market has been losing steam for most of this year with sales plummeting and prices sliding. The National Bureau of Statistics said on Friday that property sales dropped 8.5 percent in the first five months of the year compared to the same period last year.

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The average price in 100 key cities was 10,978 yuan ($1,784) per square meter in May, down 0.32 percent month-on-month, according to the China Index Academy Ltd, a Beijing-based research institute that's wholly owned by SouFun Holdings Ltd. That marked the first month-on-month drop since June 2012.

High profile Pan Shiyi, chairman of Soho China, a major developer, said in late May that he does not have a positive look on the housing sector. He compared it to Titanic and said it will hit the iceberg soon.

People's Daily asked experts on how they view the slowdown of the property market, whether there will be an American-style sub-mortgage crisis or Japanese-style collapse, how big is the risk of property finance and whether there are opportunities in the property market.

Feng Jun, chief economist of Ministry of Housing and Urban-Rural Development, told the newspaper that the slowdown the market is experiencing is normal adjustment. Feng attributed the year-on-year fall in new projects and sales numbers to big basement data in 2013.

Liu Hongyu, leader of the Property Study Institute of Tsinghua University, attributed the month-on-month price decline in some cities to three reasons: high holding rates of properties of local residents, people moving out due to the structural adjustment of industries, and oversupply or too high prices, according to the People's Daily. He also considers price decline to be a normal market adjustment.

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