Property prices to drop 20% next year: report

Updated: 2010-11-21 11:32
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BEIJING - China's property prices are likely to decline almost 20 percent next year starting from March or April, according to a report issued by the Beijing-based Renmin University of China (RUC).

Developers' financial strains, due to continuous government cooling measures on the nation's red-hot real estate market and monetary policy adjustment, will drag down the real estate prices, but the property market will not suffer "hard landing", the report said.

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Capital of developers is expected to sharply contract in the first quarter next year, which will be exacerbated by a peak season of bank loan repayment of developers, stricter restrictions on property buyers, and a more difficult situation for developers' bill financing, according to Liu Yuanchun, deputy dean of RUC School of Economics.

Meanwhile, Liu ruled out a steep correction in the nation's property market, saying that tight financial situation will not cause a sharp price plunge and the market is expected to realize a soft landing.

Property prices in 70 major Chinese cities rose 8.6 percent year on year in October, easing for six consecutive months from the peak in April at 12.8 percent, data from the National Bureau of Statistics showed.

The government has introduced a raft of measures to crack down on property speculation and rein in home prices since April, including suspending mortgage loans for third home purchases and raising down-payments.