Housing prices will likely remain stable over the next 12 months
while real estate developers will face greater pressures in
financing amid tighter government controls, industry experts said
yesterday.
"Due to the increasingly stricter regulations aimed at both
adjusting the imbalance between demand and supply and curbing the
soaring property prices, we expect an easing in price rises in the
Chinese property market," Fitch Ratings said yesterday in a market
outlook report. "Property developers are, however, likely to face
more pressure in financing and liquidity this year."
A widening gap between demand and supply has been driving up
real estate prices in China over the past few years.
One factor is that land shortages and land hoarding have led to
an undersupply, and another is that rising investment-driven demand
have pushed property prices to a record high, industry people
said.
"The market will consequently face stricter regulations, and
credit tightening will become the normal practice in the sector,"
said Matthew Kong, associate director with Fitch's Asia Corporates
team. "However, the authorities will put more emphasis on
addressing supply issues while continuing to curb demand to narrow
the demand-supply gap and stabilize property prices."
One of the latest measures by the central government to increase
land supply is to charge developers a 20-percent fee, based on the
land transaction price, if they hoard plots which have been idle
for more than one year but less than two years after acquisition.
Those which have been empty for more than two years will be
reclaimed by the government, the State Council, China's Cabinet,
said in a notice on its website last week.
(Shanghai Daily January 18, 2008)
