Chinese real estate association calls for end of property cooling measures as sales plunge
|Wednesday, 18 August 2010|
A Chinese property industry group is asking the government to refrain from tightening real estate cooling measures including higher mortgage rates and lending restrictions as they are resulting in a slump in transactions.
The real estate market tightening measures should be postponed in order to stabilize the market, according to Zhu Zhongyi, vice chairman of the China Real Estate Association.
His call comes as the latest official figures show that property prices in China rose at the slowest pace in six months in July and the value of sales fell 19.3% from a year earlier.
Zhu firmly puts the blame on the crackdown on real estate speculation and says that property companies are concerned that cooling sales may prompt developers to slow land purchases and new projects and harm the industry’s growth over the next two years.
His association represents more than 2,000 real estate developers and intermediaries across the nation and says they have experienced a variety of effects. A Chinese property industry group called on the government to refrain from tightening real-estate curbs further after measures including higher mortgage rates and lending restrictions led to a slump in transactions.
But there seems to be no lack of buyers including those seeking places to live and investors on a small and big scale. Algemene Pensioen Groep, which manages about €250 billion for the largest Dutch pension fund, said it plans to increase its real estate investment in Asia by €1 billion in three to five years as it seeks to benefit from the region’s economic growth.
‘When a country is growing and a middle class is being established, you’ll see a huge number of people who need better quality, affordable housing,’ said Hong Kong based Daan Van Aert, head of strategic real estate at APG Investment Asia, a subsidiary of APG.
China’s housing market looks attractive in the long run, Van Aert said, even amid government efforts to cool prices. The slowdown “’s healthy because it gives more room for sustainable long term growth,’ he added.
The figures from the National Bureau of Statistics certainly seem to show that the cooling measures are taking effect. Property prices in 70 major cities rose 10.3% year on year in July, down from 11.4 % in June.
It is the third straight month that year on year growth in prices has slowed. Prices rose 12.8% in April, the biggest on year rise for a single month since July 2005, when the survey was widened to 70 cities from 35.
Total floor space, commercial and residential, sold last month fell 15.4% year on year to 64.66 million square metres and the value of sales fell 19.3% on year to 306.6 billion yuan ($45.3 billion dollars).
‘House price inflation is slowing and should continue to ease further in the months ahead, but so far it has been a gradual deceleration rather than an abrupt correction in prices,’ said Brian Jackson, senior analyst at the Royal Bank of Canada in Hong Kong.
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