Tag Archive | "China"

Housing Prices Fell in China During the Month of March

Residential real estate prices in China declined once again during the month of March. The country is still coping with the restrictive policies set in place by the government regarding the purchase of homes. The government’s efforts continue to be successful in reducing the average price of homes throughout the country. The regulations were put in place to prevent the formation of a massive housing bubble like the one that has had a detrimental effect on the United States economy.

 

According to the most recent reports, some regions fear that the Chinese national government will impose more strenuous restrictions in the coming months. Residential real estate prices have increased in some areas, as have sales. It is for that reason that some developers believe that more regulations will be announced in the near future.

 

Many developers had offered extensive discounts to customers in hopes of persuading them to buy a new home. However, the strategy has had little impact, as the total number of homes sold is still down from the previous month.

 

Prices fell in almost forty of the seventy reporting Chinese cities. The declines will most likely continue in those regions. Economists believe that the overall market will drop by roughly ten percent by the end of the year.

 

Housing market experts are watching the total sales figures very closely. If transaction numbers in the Chinese residential real estate market continue to perform well, it is essentially inevitable that tougher restrictions will be put into place. There has been no official announcement as of yet regarding the possibility of new restrictions, though many believe that one may come in the next few weeks.

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Beijing Housing Prices Drop 21%

China’s residential real estate market continues to feel the impact of the restrictions set in place by the national government regarding the housing market. Housing prices in Beijing fell twenty-percent year-over-year in the first quarter.

 

Residential real estate prices will likely continue their descent throughout the year, as the national government has made it clear that they have no intentions of removing the current restrictions that are in place. The government is looking to deflate housing prices to realistic levels so as to avoid a major housing crisis as seen in the United States over the last five to six years.

 

The current drop in prices in the Chinese residential real estate market is the largest that the country has seen since the restrictions were imposed. They came as a result of developers slashing prices significantly so as to finalize more sales, and thus boost their market share.

 

Discount sales will likely continue in the coming months, and the average price will fall even further.

 

In addition to housing prices falling, housing sales also dropped substantially. The number of residential real estate properties sold in Beijing dropped more than fourteen percent, hitting its lowest mark in nearly five years.

 

Just a month ago, local government officials attempted to opt out of the imposed national restrictions. However, they were forced to abide by them after the national government threatened sanctions against the local municipalities.

 

The Chinese economy has suffered greatly from the imposed real estate restrictions, though the government believes that they are necessary to thwart off a greater economic crisis.

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Analysts Believe China’s Real Estate Market is Simply Cooling

Over the last few months, many economists and analysts have claimed that China’s real estate market is in the midst of a major crash that would likely do damage in other areas of the nation’s economy. While the housing market is certainly weakened, as can be seen in the five straight months of price declines, various analysts are stepping forward and speaking out against the idea that the market is crashing.

 

The declines experienced in the Chinese housing market have been gradual across the nation, as opposed to a sudden massive crash that would be experienced if a housing bubble were to have burst. The gradual declines in pricing have come as a result of the government’s imposed property restrictions, which have made some ineligible to buy properties, and others unable to secure the necessary financing to make a purchase.

 

There have been many doomsday predictions regarding China’s housing market in the past six months. Some have said that the overall residential real estate market in China may fall by as much as thirty percent during the year. While prices will certainly continue their descent, analysts now believe that such a massive decline will not take place. Rather than labeling the declines in pricing as a real estate crash, these analysts believe that the price drops are simply the result of the market correcting itself.

 

One of the big reasons why some analysts are not calling the current situation in China a housing crash is that there is no sign of a foreclosure crisis. Even as prices continue to gradually decline, it is highly unlikely that the nation will see a spike in the number of foreclosures.

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China Home Prices Continue Their Descent

As the Chinese government continues to back their residential real estate restrictions, the housing market continues to experience a decline in pricing. Prices in China’s housing market fell yet again last month in the majority of the nation’s cities.

 

The Chinese Premier has stated that the current restrictions are necessary to prevent the growth of a housing bubble that could result in a seriously devastating crash. However, the current restrictions are taking its toll on the Chinese economy, and many international economists believe that the Chinese government has created its own economic crash.

 

With cement and steel production down due to lowered demand, and car sales growing weaker each week, it is evident that the market is struggling more than the Chinese government would like one to believe. Despite the declines in the previously mentioned industries, the Chinese Premier continues to be positive about the overall state of the economy, stating that it is stronger than ever.

 

The current restrictions are part of a two-year plan to control housing prices. They include regulations regarding down payments and mortgage rates, as well as restrictions on the purchasing of properties. The government is also trying to build millions of low-cost homes, which will surely cause a decline in real estate prices.

 

As prices continue to fall, many economists wonder exactly when the Chinese government will ease the restrictions that are in place, or even do away with them all together. Most analysts believe that China has not yet hit the bottom in terms of their residential real estate market. In fact, most don’t even know when the bottom will finally be reached.

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China’s Government Warns of Chaos if Property Restrictions Are Eased

China’s Premier, Wen Jiabao, stated last week that China’s real estate market could fall into a state of chaos if the controversial property restrictions are eased. The government has been facing a great deal of pressure from local governments and real estate developers to either eliminate, or drastically reduce the restrictions that are currently in place.

 

The Chinese government, however, believes that housing prices are still too high in the current market. By failing to engage in corrective measures, they believe that the market will form a bubble that, when it bursts, could be far worse than that which has crippled the United States. While they are currently facing a bit of negative pressure from property developers, the Chinese national government believes that the current measures will be better for the country in the long term.

 

The government has planned to enact a new nationwide property tax that would replace some of the current restrictions in place on multiple home purchases, though it has faced great resistance from the nation’s wealthiest individuals. That resistance has caused the government to delay the new property tax until further notice.

 

The Chinese Premier has called for more people to consider renting instead of buying a home. He has stated that, while everybody should have a place to live, not everybody should own a home.

 

Economists around the world have estimated that the Chinese market could fall as much as ten to twenty percent in the next year. While that drop in pricing may help the country to avoid a housing bubble, it has certainly had negative effects on local governments in China.

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China’s Main Banks Will Ease Lending Restrictions

Four of China’s main banks have announced a decision that could trigger serious repercussions from the Chinese government. Just days after the Chinese government announced that it would not be easing any of the imposed property restrictions; the nation’s banks did just that. The four primary banks, which include Industrial and Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, and Agricultural Bank of China Ltd, all announced that they would be reducing or eliminating lending restrictions.

 

The easing of restrictions includes charging lower rates to developers and first-time homebuyers. Certainly the banks have been feeling the adverse effects of declining business that came about as a result of the restrictions. As such, they had no choice, but to take action in addressing the current lending situation.

 

Many economists believe that the action by the banks could help the residential real estate market in China rebound in strong fashion, as it will give buyers and developers drive a wave of growth in the second and third-tier cities of China.

 

Residential property prices have fallen for nearly a year straight, causing many developers to go out of business. The action also prompted some banks to close up shop on their lending division.

 

It has yet to be seen just how China’s government will react to this rogue action taken by four of the country’s largest banks. Some believe that the action may incite a financial civil war of sorts between the government and the banking system, particularly due to the most recent sequence of events.

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Growing Property Supply in China Worries Economists

Housing inventory levels continue to soar, as fewer homes are being sold in China’s residential real estate market. Economists are now worrying that the massive boost in property supply may cause housing market to collapse throughout Asia.

 

During the Lunar New Year holiday, housing sales plummeted across various cities in China. Shanghai experienced roughly thirty sales per day, well below its three hundred and fifty-seven per day average. Beijing didn’t even see the sale of one new apartment during the holiday week.

 

Since the Lunar New Year holiday week, housing sales remained uncharacteristically low at roughly thirty percent below the already deflated levels from December. Consumer confidence in the housing market is crumbling, and more buyers are almost certain that they can buy at a better price if they wait for some time. With that said, the condition of the market is eerily similar to that of the United States falling the big residential real estate crash.

 

According to most economists, there is no clear defined end in sight as to when the property market will finally hit rock bottom. The government has shown no signs of letting up on the imposed property restrictions. Economists believe that local governments may have to act on their own to buy unoccupied properties in order to prevent the complete crash that the national government had intended to avoid.

 

While the imposed property restrictions have been effective with respect to the reduction of prices, they have also caused a massive glut in supply inventory. As such, their actions could potentially lead to the crash that they were trying to prevent in the first place.

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Property Prices Fall Yet Again in China

Residential real estate prices fell once again in China during the month of January. More than sixty-five percent of surveyed cities in China fell month-over-month. The remainder of the cities remained stable in pricing, exhibiting neither an increase nor a decrease.

 

The largest price drop in January was experienced by Wenzhou. The city experienced a decrease of six-tenths of a percentage point. Beijing and Shanghai both posted decreases of one-tenth of a percent.

 

Residential Real Estate prices in China have fallen consistently over the past year. The country implemented various price correction policies that heavily restricted lending and the purchasing of new homes. The restrictive policies were set into place to prevent the formation of a housing bubble.

 

The restrictive policies have certainly had their share of controversy, as many developers in the country have seen their businesses collapse as a result. It is unlikely that China will put an end to the price correction policies anytime soon. Economists have predicted that prices in China’s residential real estate market could fall by as much as thirty percent this year in a worst case scenario.

 

Many have feared that the restrictions could cause the nation’s entire economy to stumble, which would also cripple other economies around the world. However, China’s government has insisted on keeping the real estate restrictions in place. In fact, the central government has prohibited local governments from relaxing restrictions.

 

Prices are expected to continue falling throughout the year, and there has been no clear indication made by the Chinese government as to when they will remove the property restrictions.

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China Announces Plans to Limit Mortgage Loans to International Investors

China’s government is taking further action to prevent growth in its real estate market. As part of their commitment to reduce home prices, the Chinese government has announced that they will be enforcing a new restriction that severely limits the buying power of international investors in the nation’s residential real estate market.

Their most recent restriction denies foreigners access to medium and long-term mortgage loans. This property curb isn’t the first to target foreigners, who were also the subject of another restriction imposed in November. That restriction required first-time foreign homebuyers to prove that they have been employed for at least a year in China, and that they do not own any other properties in the nation.

Foreign buyers do not make up a huge segment of the buyers in the residential real estate market. However, the Chinese government believes that if they can reduce the buying power of foreigners, then they will be able to have better control over the property market as a whole.

For more than six months, the Chinese government has imposed a variety of property restrictions intended to reduce home prices and prevent the formation of a housing bubble. Housing prices have now fallen for a few consecutive months, and analysts believe that they will continue to decline.

Despite the declines, the government in China is looking to see further reductions in pricing, and is considering additional measures to make sure that prices continue to fall. There has been no timetable set regarding when the restrictions will be lifted.

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Property Prices in China Decline Once Again

Residential real estate prices in China fell for the fifth straight month in January, indicating that the restrictions imposed by the government are still taking their toll.

Prices dropped two-tenths of a percent in the last month throughout China, particularly in the major cities. While there has been a decline in each of the last five months in China’s residential real estate market, the drop has been fairly minimal. Some analysts predicted late last year that China could see a decline in average pricing of as much as thirty percent. Such a freefall has not been seen yet.

The Chinese government continues to stand by its housing market restrictions, and believes that the market still has a ways to go before there is a realistic correction in pricing.

While pricing is down in sixty cities in comparison to December, it actually remains higher than it was one year ago. With that being said, however, analysts believe that prices will continue to go down for as long as the current restrictions are in place.

There have been mixed reactions around the globe regarding China’s property restrictions. Many have been exceedingly critical of the restrictions since they were set into place. Others, though, have acknowledged that the impact has not nearly been as bad as they expected it to be.

Developers, though, continue to struggle, as the property curbs have severely limited their cash flow and overall business. Local governments are also facing tough times, as they typically rely on land sales as a means of generating the revenue that they need.

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