Economy

Homebuyers given bleak outlook on prices

By Wang Qian (China Daily)
Updated: 2010-02-05 06:56

Homebuyers given bleak outlook on prices

The Chinese language press calls areas that fetch very high prices as "land kings".

Soaring urban housing prices, an enduring headache for millions of homebuyers, have yet to peak despite the central government's vow to cool the real estate sector, according to a group of real estate businesses.

"We think that home prices will continuously increase until 2020," said Ren Rongrong, a researcher from the China Real Estate Chamber of Commerce, at a press conference.

"The demand for homes is rising in large cities as millions of people are flooding in and many born after the '80s are getting married," Ren said yesterday.

But there is some good news for homebuyers, according to Ren. The researcher said the rate at which prices will rise will be not be as high as rates from last year due to the government's macroeconomic control.

Last year, real estate developers gathered more than 571 billion yuan ($84 billion) for investment, a year-on-year increase of 44 percent, according to the chamber's report released at the press conference.

"With such sufficient financial support, developers will speed up their construction this year," said Ren Zhiqiang, president of Beijing Huayuan Group Corp.

As of Jan 13 this year, Beijing has started 15 housing projects with 36 on the waiting list. The average price has reached nearly 22,000 yuan per sq m, a year-on-year growth of 6.6 percent, according to the latest data from the Beijing Municipal Bureau of Land and Resources.

Last year, the average home price grew by 75 percent from more than 10,000 yuan per sq m in January to more than 18,000 yuan per sq m in December, according to statistics.

The data released by the National Bureau of Statistics last month showed the average price for a commodity house hit a record high, reaching 4,695 yuan per sq m across the country with a year-on-year increase of 24 percent.

Large profit margins and an increasing demand will push housing prices in Beijing from an increase of 15 percent to 30 percent, said Chen Baocun, deputy secretary general with the National Real Estate Manager Alliance, on Jan 16 in his blog in soufun.com.

For 30-year-old Sun Yuchun, a mother-to-be in Beijing, buying a house is so urgent with her baby expected in April of this year. But she is still waiting for frightful prices to drop a bit.

Ren Zhiqiang predicted that the trend of rising home prices is directly linked with the growth of gross domestic product (GDP). Experts have forecast a GDP growth of 9 percent this year.