Property prices in China are likely to halve over the next two years, a top government researcher has predicted in a powerful signal that the country’s economic downturn faces further challenges despite recent positive data.

The property market, along with exports, were leading drivers of the booming Chinese economy over the past decade and the slumps in both have taken a heavy toll.

Cao Jianhai, professor at the Chinese Academy of Social Sciences, a leading government think tank, said an apparent rebound in the property market was unsustainable over the medium term and being driven by a flood of liquidity and fraudulent activity rather than real demand.

He told the Financial Times he expected average urban residential property prices to fall by 40 to 50 per cent over the next two years from their levels at the end of 2008.

“Prices may not fall in the near term but I expect a collapse starting next year, followed by many years of stagnation,” said Mr Cao, known as one of the “three swordsmen” of the real estate market because of his influence as an official economist.

Average urban housing prices across 70 cities in China fell 1.3 per cent from a year earlier in March but were up 0.2 per cent from February, according to figures released on Monday by the National Bureau of Statistics.

That broke seven months of sequential declines and was accompanied by a rebound in transaction volumes.

Residential property sales rose 8.7 per cent from a year earlier in the first quarter in terms of floor space sold, compared with a fall of 20.3 per cent for the whole of 2008.

Real estate agents in the residential property bellwether of Shanghai said the market seemed to have bottomed out as a result of government stimulus measures, falling prices and pent-up demand from owner-occupiers.

But Mr Cao said preliminary government investigations had turned up numerous examples of real estate developers using fake mortgages to offload apartments on to the books of state-run banks facing enormous pressure from Beijing to rapidly increase lending to boost the economy.

Sales are also being driven by real pent-up demand from urban citizens, but Mr Cao said many were jumping into a false rebound because they had never seen house prices drop before.

Before widespread privatisation of real estate began in the late1990s, most city dwellers were allotted housing by their work unit or by the state. The first private home mortgages since the 1949 communist revolution were granted barely a decade ago by state-owned banks.

At a national level, average housing prices tripled between 2003 and the peak in mid-2008 and are now 10 to 12 times average income, which means 60 per cent of homebuyers’ monthly income must go to mortgage repayments, Mr Cao said.

The volume of empty apartments across the country hit 91m sq metres at the end of last year, up 32.3 per cent from a year earlier, according to official figures.

Those numbers included neither the huge volumes of completed real estate projects whose owners are waiting for market conditions to improve before they put them on the market, nor the estimated 587m sq m or apartments sold in the past five years but left empty by their owners.

(taken from ft.com, http://www.ft.com/cms/s/0/9a36b342-280e ... abdc0.html )

It's about time I would say. And even then, if you look at value for money, it is still highly overpriced.

mainlanders would rather lose their left nut than lower their prices. it's a face thing.

8lrr8 wrote:mainlanders would rather lose their left nut than lower their prices. it's a face thing.

yeah, if a man marry a waitress from a pimp restaurant, then it will be great and will never involve the face thing in here, cheers !

8lrr8 wrote:mainlanders would rather lose their left nut than lower their prices. it's a face thing.

Yeah I am affraid so. Only chance would be forclosures

so you think that some Property business it will be the devastating credit crisis in nowadays, right ?

After Textiles & Garment industry, Construction provides employment to a large number of migrant workers. Hence the construction activity needs to continue if the country does not want to witness a social unrest.

look on the bright side. u cud acquire a moldy disgusting flat with a direct connection to the sewers, in the worst country in the world for half price

8lrr8 wrote:mainlanders would rather lose their left nut than lower their prices. it's a face thing.

sheeeet, half of it is owned by HK and Taiwan, look what they did in Shenzhen
1. trouble
2. take money
3. run

..no offense, it's just business

^ we'll see.

shine wrote:Property prices in China are likely to halve over the next two years, a top government researcher has predicted in a powerful signal that the country’s economic downturn faces further challenges despite recent positive data.

...

Before widespread privatisation of real estate began in the late 1990s, most city dwellers were allotted housing by their work unit or by the state. The first private home mortgages since the 1949 communist revolution were granted barely a decade ago by state-owned banks.

...

At a national level, average housing prices tripled between 2003 and the peak in mid-2008 and are now 10 to 12 times average income, which means 60 per cent of homebuyers’ monthly income must go to mortgage repayments, Mr Cao said.

First of all, home mortgages were alive and well at least 18 years ago. I see Mr. Cao, the Chinese social scientist that he is, has a disdain for accuracy. This is not a good sign.

I know that Chinese social scientists are proficient at cooking the books, but it would be a nice start to just see from where Mr. Cao pulls his statistics on tripled housing costs and the referenced unspecified average income.

I doubt anybody could say with any degree of accuracy what housing pricess will do over the next few years, but I don't believe property values will drop 50% during that time period.

CoffeeHawk_0 wrote:

8lrr8 wrote:mainlanders would rather lose their left nut than lower their prices. it's a face thing.

sheeeet, half of it is owned by HK and Taiwan, look what they did in Shenzhen
1. trouble
2. take money
3. run

..no offense, it's just business

Define "they."

first mortgage was indeed in 1986 but private mortgages didn't take off until housing reform in the late 90s.

house prices i would say have doubled. i don't know what's happened to costs.

CoffeeHawk_0 wrote:

8lrr8 wrote:mainlanders would rather lose their left nut than lower their prices. it's a face thing.

sheeeet, half of it is owned by HK and Taiwan, look what they did in Shenzhen
1. trouble
2. take money
3. run

..no offense, it's just business

The business rule for all humans in the world is that you pay me money, I pay you my duty, but the relationship rule for all humans to deal with it in nowadys is that you treat me honestly or nicely, then I treat you the same way you do it in our date, but if you wanna fool me around or wanna bite and flirt me at same time, then I will give you a bomb for nothing can make you happy immediately, but it just my serious lesson for pleasing you guys in this Thursday afternoon, cheers !

The evidence can be seen everywhere. Dark empty apartment blocks. All of standard construction, standard shape, standard plumbing, standard electrics etc i.e. mass produced, just like everything else in China. They are building one block after another, but the missing link in these developments is innovation. The only properties that will buck the trend are the lane houses due to scarcity. You're right in that the locals will not drop their prices due to the face thing. They'd rather just hold on to the empty flats and remain in denial. I mean, imagine telling your in-laws that you made a loss.

I can see the 50% drop taking place in certain suburban areas outside of Shanghai, but more likely to be 20%-30% over the next 2 years in and around more urban areas in Shanghai. Prices won't rocket thereafter. The real estate boom ended last year. Some other sort of asset will boom instead. Prices stabilising at 20%-30% below today's prices would reflect the current over-supply.

I reckon commercial space will take a bigger hit though.

I can see the 50% drop taking place in certain suburban areas outside of Shanghai, but more likely to be 20%-30% over the next 2 years in and around more urban areas in Shanghai. Prices won't rocket thereafter. The real estate boom ended last year. Some other sort of asset will boom instead. Prices stabilising at 20%-30% below today's prices would reflect the current over-supply.

I reckon commercial space will take a bigger hit though.

Man, your British English it just is as good as how you imagine the real estate or the properties its prices of those urbans of China it will be raised or not by your sensible judgement, cheers.

^ Ah, yes ... the financial acumen of an expensive prostitute.

And, Nutalie, I do not want to meet you in June. I could have a more enlightening conversation with a poodle. Probably better sex, too.

underh20 wrote:^ Ah, yes ... the financial acumen of an expensive prostitute.

And, Nutalie, I do not want to meet you in June. I could have a more enlightening conversation with a poodle. Probably better sex, too.

So why you wanna spend your time on a prostitute in here? any words you wanna explain it ?

underh20 wrote:^ Ah, yes ... the financial acumen of an expensive prostitute.

And, Nutalie, I do not want to meet you in June. I could have a more enlightening conversation with a poodle. Probably better sex, too.

the problem is that I do not pay attention on who really speaks british english or not in shexpat, the problem is that I only care about someone he likes his prostitue or not in nowadays, so your case can be done by this moment, cheers.


Kisses & hugs, hahah.........

What are you talking about? They should replace the white noise they play in Guantanamo with recordings of your speeches. That'd break the captives in no time.