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China’s property market likely to consolidate in H2, 2014

The property market in China is likely to consolidate in the second half of the year, as strong demand and limited supplies will offset the chances of an imminent market collapse, market analysts reported last month.

Raymond Ngai, head of China Property Research at Merrill Lynch (Asia Pacific) Ltd. said he expects the property sector to see slower growth this year given that home prices and sales volume have fallen. However, he doesn’t expect the market to collapse.

The financial services firm said average property prices in China will fall by 5 percent this year to about 10,291 yuan ($1,650) per square meter, while total sales volume will also see a 5 percent decline to 1.1 billion sq m by the end of the year.

Ngai indicated that sentiment is improving as the central government is applying differential policies. “Cities with high inventory rates will continue to release their own easing measures. Recently smaller cities have been more flexible in implementing Beijing’s home purchase restrictions. The central government accepted such moves in order to let them, especially the small ones, digest their inventories,” he said.
In the light of nationwide restriction on home purchasing, a dozen local governments have announced their own easing policies in various forms this year to encourage homebuyers.

Liao Qun, chief economist of China Citic Bank International Ltd in Hong Kong, commented: “The market will be much more stable through the consolidation. After all, buying real estate is still the top priority when people have money.”
Source: China Daily