Chinese Real Estate: Uncertainty Over Government Stimulus Policies

The residential real estate market is booming in China, but investors are getting worried that the Chinese government will soon take strides to cool the market. With development …

The residential real estate market is booming in China, but investors are getting worried that the Chinese government will soon take strides to cool the market. With development keeping pace with demand, and both sales volume and prices climbing, the property market is likely to continue its positive course unless the flow of financing is obstructed. For more on this, see the following article from Property Wire.

The real estate industry in China is nervous that official measures may be taken to prevent a property bubble.

With home sale volumes and prices reaching record highs in recent months, real estate industry analysts gathered over the weekend at the China International Real Estate & Archi-tech Fairs (CIHAF) to discuss development trends in the next year.

‘What we are concerned with most is whether the macro control policies will be changed at China’s Central Economic Work Conference and from that we will see whether preferential policies toward the real estate market will expire,’ said Huang Jinxia, sales manager at Sinohydro Real Estate.

Property sales in major cities have soared, up 105.9% in Beijing, some 58.77% in Shanghai, up 75.2% in Shenzhen and 83.49% in Guangzhou in the first 11 months of 2009 compared with last year, according to figures from the China Real Estate Model Index Report which was released over the weekend by the China Index Academy, a real estate research institute.

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And housing prices in other top tier cities, including Hangzhou and Tianjin, also reached record highs in the last two months, according to the report.

The Chinese government introduced a number of stimulus policies including tax exemptions and interest discount for loans aimed at boosting the market during the global economic downturn.

According to analysts there will be no immediate slowing of growth.

‘Home buyers will still be enthusiastic in buying homes in the short term because of the country’s relatively easy monetary policy,’ said Zhang Hao, sales manager of the Beijing Runze Zhuangyuan Real Estate Company.

In the long term the real estate market will still see an upward trend, though it will not develop as fast, he added.

Most of the real estate companies will keep on developing new homes faster, so the supply will increase in the first half of next year, according to Ma Yun, the director of the Hongshan Shijia Project of China Resource Land.

But analysts from the financial industry warned real estate developers to pay attention to liquidity.

‘Some large real estate companies will find financing much easier than small ones, because the China Banking Regulatory Commission’s policies will be looser for developers with much greater developing strength,’ said Ye Tianfang, director of the real estate and financial department of the China Minsheng Banking Group.

‘Monetary policies will possibly change and be full of uncertainty, although the macro economy will go on well next year, he added.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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