Categorized | International

China’s Government Believes Home Prices Must Fall 30%

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The deputy director of China’s Financial and Economic Affairs Committee has come out and answered the questions and concerns of many Chinese citizens regarding the current state of the housing market. There has been great concern over the past six to seven months that the restrictions imposed on China’s residential real estate market will have detrimental effects on the state of the overall national economy.

Many analysts have predicted that China’s housing prices may fall by as much as thirty percent. Housing prices have already dropped a few percentage points, leading many developers to plead to the government to loosen the restrictions. While China’s government has been adamant about maintaining the restrictions, the deputy director of the country’s Financial and Economic Affairs Committee has finally come out and set a number for the desired decrease in pricing.

He believes that the housing prices must fall the predicted thirty percent in order to be at a reasonable and sustainable level. He believes that the housing market had grown out of control over the past few years, and a government-enforced reduction of thirty-percent in market will have the most long-term benefits.

With that being said, the Chinese government has no intentions of loosening the restrictions anytime soon. It is clearer than ever that developers in China will be faced with an incredibly difficult year in 2012, and it is likely that a few of them will go belly up at some point in the year.

Analysts believe that the government may ease the current property restrictions later this year, if, and only if property values have fallen enough to meet their expectations.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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