Property price growth in China's major cities slowed down 1 percentage point in June from the previous month, according to the National Development and Reform Commission (NDRC). The growth rate has dropped for six months in a row. In a statement 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.
"Though there is still a year-on-year growth in property prices, in some cities prices have plummeted from the peak. Given the continued credit crunch and the poor confidence of consumers and enterprises, there is still room for property prices to slide further in the second half of the year," says Chen Mingchun, a senior economist with Lehman Brothers, adding developers will also have to lower their prices to ensure liquidity.
However, Ben Christensen, head of research for Jones Lang LaSalle Beijing, believes the current wait-and-see attitude in the market does not mean housing demand is evaporating. "If the market doesn't drop as much as people expect after the Olympic Games, prices will rally again and will probably even rise."
Most developers are now betting on sales rising in September and October, normally the best time for property sales. And, the NDRC has just approved the draft design of the country's real estate warning system, covering 40 cities, which will be run by the Ministry of Housing and Urban-Rural Development.
Guo Shiping, head of the financial institute of Shenzhen University, says the peak of mortgage crisis may really emerge at the end of the year as it usually takes people nearly one year to decide to stop paying mortgage after the property market began to slide.
(China Daily August 4, 2008)
