Property prices in Chinese cities slow down a bit

By Hu Yuanyuan (China Daily)
Updated: 2008-07-17 07:02

Property price growth in China's major cities slowed down 1 percentage point in June from the previous month, the National Development and Reform Commission (NDRC) said Wednesday.

In a statement published on its website, the NDRC said property prices in China's 70 large and medium-sized cities rose 8.2 percent year-on-year in June, compared with 9.2 percent in May, indicating the sector is cooling down.

Residential properties in Southwest China's Chongqing Municipality. Picture taken on June 21, 2008. [Xinhua]

The cities where new property price growth exceeded 13 percent year-on-year last month included Urumqi, Haikou, Ningbo, Beijing and Hangzhou, which saw growth rates of 20.2 percent, 18.1, 14.7, 14.3 and 13.3 percent respectively. The ranking is the same as that in May, but the growth rate for each city dropped almost 2 percent except Haikou.

Among the 70 cities, Shenzhen is the only one to have experienced a property price drop on a yearly basis, with prices of new residential units decreasing 1.2 percentage points year-on-year.

Though some experts worry about banks' growing bad loans triggered by the falling property prices, Chris Brooke, president and CEO of CB Richard Ellis (Greater China), said China is not likely to suffer a credit crisis like the US, despite the ongoing adjustments across the country's property market.

"Some big corrections occurred only in a few cities that experienced crazy property price growth last year but don't have enough demand to support the market," said Brooke, stressing the market adjustment should be seen on a city-by-city and project-by-project basis rather than an overall collapse.

"Besides, property demand in China is also much stronger than that in the US," he added.

Ben Christensen, head of research for Jones Lang LaSalle Beijing, echoed Brooke's views. The current wait-and-see sentiment in the market does not mean housing demand is evaporating, he said. "If the market doesn't drop as much as people expect after the Olympic Games, prices will rally again and will probably even rise."

Some might be surprised by the Beijing housing market's 14.3 percent year-on-year growth given the heavy discounts offered by developers. But Qin Xiaomei, head of the research department of CB Richard Ellis's Beijing branch, said the property price increases in the capital were normal as Beijing's property prices had really picked up in the second half of 2007.

"But we did notice an increasing number of property refunds and discounts in the market as more and more people take a wait-and-see attitude. However, property prices in key markets such as Beijing and Shanghai are not likely to see big drops due to the strong market demand."